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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-KSB
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1999
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _____ to _____
Commission File Number 1-11454-03
vFinance.com, Inc.
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(Name of Small Business Issuer as specified in its charter)
Delaware 58-1974423
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
3300 PGA Boulevard, Suite 810
Palm Beach Gardens, Florida 33410 (305) 374-0282
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(Address of principal executive offices) (The Company's telephone number,
including area code)
Securities registered pursuant to Section 12(b) of the Act:
TITLE OF CLASS NAME OF EXCHANGE ON WHICH REGISTERED
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Common Stock, par value $0.01 per share OTC Bulletin Board
Securities registered pursuant to Section 12(g) of the Act: NONE
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") during the past 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
Check if there is no disclosure of delinquent filers in response to
Item 405 of Regulation S-B contained in this form and no disclosure will be
contained, to the best of registrant 's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [X]
The issuer's revenues for the 1999 fiscal year were $1,502,427.
The aggregate market value of the voting stock held by non-affiliates
of the issuer on March 27, 2000, based upon the average bid and ask prices of
such stock on that date was $17,541,860.44. The number of shares of Common Stock
of the issuer outstanding as of March 27, 2000 was 9,109,400.
DOCUMENTS INCORPORATED BY REFERENCE
None
Transitional Small Business Disclosure Format (check one): Yes [ ] No [X]
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TABLE OF CONTENTS
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Page No.
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INTRODUCTORY NOTE 1
PART I.
Item 1. Description of Business 2
Item 2. Description of Property 6
Item 3. Legal Proceedings 6
Item 4. Submission of Matters to a Vote of Security Holders 6
PART II.
Item 5. Market for Common Equity and Related Stockholder Matters 6
Item 6. Management's Discussion and Analysis of Financial Condition and
Results of Operations 11
Item 7. Financial Statements 13
Item 8. Changes In and Disagreements With Accountants on Accounting and Financial
Disclosure 37
PART III.
Item 9. Directors, Executive Officers, Promoters and Control Persons;
Compliance with Section 16(a) of the Exchange Act 37
Item 10. Executive Compensation 39
Item 11. Security Ownership of Certain Beneficial Owners and Management 41
Item 12. Certain Relationships and Related Transactions 42
Item 13. Exhibits and Reports on Form 8-K 44
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Introductory Note
FORWARD-LOOKING STATEMENTS.
In connection with the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995 ("the Reform Act"), vFinance.com, Inc. (the
"Company"), is hereby providing cautionary statements identifying important
factors that could cause the Company's actual results to differ materially from
those projected in forward-looking statements made herein. Any statements that
express, or involve discussions as to, expectations, beliefs, plans,
objectives, assumptions or future events or performance (often, but not always,
identified through the use of words or phrases such as the Company or
management "believes," "expects," "anticipates," "hopes," words or phrases such
as "will result," "are expected to," "will continue," "is anticipated,"
"estimated," "projection" and "outlook," and words of similar import) are not
statements of historical facts and may be forward-looking. These
forward-looking statements are based largely on the Company's expectations and
are subject to a number of risks and uncertainties, including but not limited
to, economic, competitive, regulatory, growth strategies, available financing
and other factors discussed elsewhere in this report and in the documents filed
by the Company with the Securities and Exchange Commission ("SEC"). Many of
these factors are beyond the Company's control. Actual results could differ
materially from the forward-looking statements made. In light of these risks
and uncertainties, there can be no assurance that the results anticipated in
the forward-looking information contained in this report will, in fact, occur.
Such forward-looking statements involve estimates, assumptions, and
uncertainties, and, accordingly, actual results differ materially from those
expressed in the forward-looking statements. Such uncertainties include, among
others, the following: (i) the Company's potential inability to recieve success
fees as a result of transactions not being completed, (ii) a general decrease
in merger and acquisition activities, (iii) increased competition from business
development portals, management consultants and investment banks, (iv)
technological changes, (v) the Company's potential inability to implement its
growth strategy through acquisitions or joint ventures, and (vi) the Company's
potential inability to secure additional debt or equity financing.
Any forward-looking statement speaks only as of the date on which such
statement is made, and the Company undertakes no obligation to update any
forward-looking statement or staements to reflect events or circumstances after
the date on which such statement is made or to reflect the occurrence of
unanticipated events. New factors emerge from time to time and it is not
possible for management to predict all of such factors, nor can it asses the
impact of each such factor on the business or the extent to which and factor,
or combination of factors, may cause actual results to differ materially from
thos contained in any forward-looking statements.
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ITEM 1. Description of Business
THE COMPANY'S SERVICES
The Company, vFinance.com, Inc., is a "new media" enterprise that
provides business development tools, information, products and services to
entrepreneurs and executives of small and medium sized companies to assist them
in organizing and growing their businesses. The Company currently has two main
business units, which correspond to its two wholly-owned subsidiaries. The first
unit operates an Internet business development and venture capital portal
vFinance.com, that helps to connect entrepreneurs and business executives
with service providers who can assist with capital and advisory services. The
second unit provides investment banking and management and technology consulting
services to users of the Company's portal and to other third parties.
The Company's business development vertical portal provides the small
business executive or entrepreneur with access to financing sources, ancillary
service providers and information about the venture capital industry in general.
This activity is conducted through vFinance Holdings, Inc., a wholly-owned
subsidiary. The web site is typically listed by search engines in the top five
hits for relevant content. Unlike most of its competitors, the Company does not
charge a commission or take a transaction fee for deals that are completed
through the use of the site. Most of the vFinance site provides valuable
information to the small business executive or entrepreneur free of charge.
However, the Company does charge nominal fees for the use of proprietary search
engines and premium services such as financial service listings and business
plan listings. The combination of relevant content and ease of use has resulted
in the site having over 150,000 user sessions each month. This rate is growing
at approximately 12% per month, with the average user session lasting in excess
of four minutes. The Company's business development vertical portal is located
at www.vfinance.com. However, information on the Company's website is not
incorporated herein by reference and should not be considered part of this
Annual Report on Form 10-KSB
The Company's other business unit, which is conducted through its
subsidiary Union Atlantic LC, provides management consulting and investment
banking services. Union Atlantic's management consulting business has been in
operation for four years. Union Atlantic works with senior management in
assessing market conditions, and taking an inventory of the client's assets
(tangible and intangible) and its operational capabilities. Union Atlantic then
identifies alternative strategies, establishes a process to build consensus and
creates a strategy for effectively implementing change. All of this is
formalized in a business case that serves as a tactical tool to ensure
communication and consistency in planning and coordination of efforts.
To augment Union Atlantic's consulting and investment banking services,
on December 24, 1999, the Company entered into an agreement to acquire the
membership interests in Pinnacle Capital Group, LC. The completion of the
Company's acquisition of Pinnacle Capital Group, LC is subject to approval of
the change of ownership by the National Association of Securities Dealers, Inc.,
which is currently pending. Pinnacle Capital Group, LC, a one-year old
investment banking firm, is a licensed broker/dealer that extends Union
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Atlantic's consulting practice into the healthcare field and provides a range of
investment banking services with an emphasis on private placements and merger
and acquisition advisory services. It also performs market research, valuations
and fairness opinions.
BUSINESS STRATEGY
The Company's strategy is to build one of the world's leading "business
development" vertical portals and thereby be positioned as a "new media"
enterprise leveraging the "convergence" of digital information to build a brand
and create customers for the Company's vertical business units. The Company
intends to use its Internet presence to acquire or partner with companies that
provide business development products and services to the same target market.
The Company believes that many of these businesses do not have the resources to
effectively grow their business and therefore may be willing to be acquired by
the Company at an attractive earnings multiple or to partner with the Company.
The Company believes that the development of a vertical network of
service providers for the small business executive and the entrepreneur market
will attract additional customers to, and provide content for, its web site. The
vFinance web site is also intended to generate business leads for each of the
Company's business units.
The Company is currently focusing on developing business units that
fall within five categories: research services, media, educational services,
marketplaces for goods and management consulting and investment banking
services.
COMPETITION
The Company experiences competition with respect to each of its
business units. The market for our services is highly competitive. We face
competition from a number of sources, including venture capital firms,
investment banks, online markets and portals for start-up companies and venture
investors, Internet incubator firms, Internet venture capital sites,
international accounting firms, international and regional systems consulting
and implementation firms, business development software firms, media outlets and
marketing and communication firms. Many of our competitors have longer operating
histories and significantly greater financial, technical and marketing resources
and name recognition than vFinance. In addition, many of our competitors offer a
wider range of services and financial products than vFinance does.
The business development portal industry consists of two categories:
websites that only provide links and articles about small business issues and
websites that provide their own content. Portals that primarily contain links,
rather than content, include: BizVillage, Business Week, EntrepreneurMag.com,
MoneyHunter and Star-A-Business.com. Portals that provide content and services
to our target market include: Merger Network, Vcapital and VentureOne, Venture
Highway, The Venture Capital Marketplace, Venture Capital Unlimited and VCA
Online.com. However, unlike the
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Company, these portals typically charge membership or transaction fees. The
Company competes with these portals by providing content and links without
significant charges to the web site user. By developing its vertical business
units, the Company hopes to derive revenue from web site users who utilize the
services of our business units.
GOVERNMENT REGULATION
REGULATION OF THE SECURITIES INDUSTRY AND BROKER-DEALERS. The Company's
business is subject to extensive regulation applicable to the securities
industry in the United States and elsewhere. As a matter of public policy,
regulatory bodies in the United States and rest of the world are charged with
safeguarding the integrity of the securities and other financial markets and
with protecting the interests of customers participating in those markets. In
the U.S., the SEC is the federal agency responsible for the administration of
the federal securities laws. Upon completion of the Pinnacle acquisition, the
Company will have a broker-dealer unit that is registered as a broker-dealer
with the SEC and in the states of California, Colorado, Connecticut, District of
Columbia, Florida, Georgia, Illinois, Massachusetts, New Jersey, New Mexico, New
York, North Carolina, Pennsylvania, Tennessee and Texas. This unit will also be
a member of the NASD, a self-regulatory body to which all broker-dealers belong.
The SEC, self-regulatory organizations, and state securities commissions may
conduct administrative proceedings which can result in censure, fine, the
issuance of cease-and-desist orders, or the suspension or expulsion of a
broker-dealer, its officers, or employees. The SEC and self-regulatory
organization rules cover many aspects of a broker-dealer's business, including
capital structure and withdrawals, sales methods, trade practices among
broker-dealers, use, and safekeeping of customers' funds and securities,
record-keeping, the financing of customers' purchases, broker-dealer and
employee registration, and the conduct of directors, officers, and employees.
EFFECT OF NET CAPITAL REQUIREMENTS. As a registered broker-dealer and
member of the NASD, the broker-dealer business unit that the Company is
acquiring is subject to the Uniform Net Capital Rule under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"). The Uniform Net Capital
Rule specifies the minimum level of net capital a broker-dealer must maintain
and also requires that a minimum amount of its assets be kept in relatively
liquid form. If a broker-dealer engages in underwriting, their net capital
requirements will significantly increase. As of December 31, 1999, Pinnacle was
required to maintain minimum net capital of $5,000 and had total net capital of
approximately $5,700. The SEC and the NASD impose rules that require
notification when net capital falls below certain predefined criteria, dictate
the ratio of debt to equity in the regulatory capital composition of a
broker-dealer, and constrain the ability of a broker-dealer to expand its
business under certain circumstances. Additionally, the Uniform Net Capital Rule
and NASD rules impose certain requirements that prohibit a broker-dealer from
distributing or withdrawing capital and require prior notice to the SEC and the
NASD for certain withdrawals of capital. Upon completion of the Pinnacle
acquisition, these rules governing net capital and restrictions on withdrawals
of funds could prevent the Company from meeting its financial obligations on a
timely basis.
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APPLICATION OF SECURITIES ACT AND EXCHANGE ACT TO INTERNET BUSINESS.
The Securities Act of 1933, as amended (the "Securities Act"), governs the offer
and sale of securities. The Exchange Act governs, among other things, the
operation of the securities markets and broker-dealers. When enacted, the
Securities Act and the Exchange Act did not contemplate the conduct of a
securities business through the Internet. Although the SEC, in releases and
no-action letters, has provided guidance on various issues related to the offer
and sale of securities and the conduct of a securities business through the
Internet, the application of the laws to the conduct of a securities business
through the Internet continues to evolve. Uncertainty regarding these issues may
adversely affect the viability and profitability of the Company's business.
CHANGES IN EXISTING LAWS AND RULES. Additional legislation or
regulation, changes in existing laws and rules or changes in the interpretation
or enforcement of existing laws and rules, either in the United States or
elsewhere, may directly affect the Company's mode of operation and
profitability.
INTELLECTUAL PROPERTY
The Company has applied for federal registration of the following
marks:
VFINANCE.COM
UNION ATLANTIC LC
ANGELSEARCH
COMPANY HISTORY
The Company was incorporated in the state of Delaware in February 1992
under the name Peachtree FiberOptics, Inc., primarily to engage in the
production and sale of plastic optical fiber ("POF"). On October 27, 1993, the
Company ceased all operations and subsequently sold certain assets relating to
its machinery and POF operations. On November 8, 1999, the Company acquired
vFinance Holdings, Inc., a Florida corporation, and Union Atlantic, LC, a
Florida limited liability company, through a Share Exchange Agreement (the
"Merger"). The Company received all of the capital stock of vFinance Holdings,
Inc. and Union Atlantic, LC in exchange for a total of 6,955,000 shares
(2,800,000 shares related to vFinance Holdings, Inc. and 4,155,000 related to
Union Atlantic, LC) of its common stock. For accounting purposes, the
acquisitions have been treated as a recapitalization (reverse acquisition) with
vFinance Holdings, Inc and Union Atlantic, LC as the acquirors, as VFin and UAL
were considered entities under common control. The Merger qualified as a
tax-free exchange under section 351 of the Internal Revenue Code of 1986.
On December 24, 1999, the Company entered into an agreement to acquire
all of the outstanding membership interests of Pinnacle Capital Group, LC, a
registered broker/dealer based in Miami, Florida. This acquisition has been
substantially completed. On March 13, 2000, the Company amended its Certificate
of Incorporation to change its name to vFinance.com, Inc., which the Company
believes more accurately reflects the Company's current business.
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EMPLOYEES
At December 31, 1999 and March 27, 2000, the Company employed two
persons and twelve persons, respectively, all of whom were full-time employees.
Any future increase in the number of employees will depend upon growth of the
Company's business.
RESEARCH AND DEVELOPMENT AND ENVIRONMENTAL MATTERS
The Company did not incur any research and development expenses. The
Company does not incur any significant costs or experience any significant
effects as a result of compliance with federal, state and local environmental
laws.
ITEM 2. Properties
Beginning January 2000, the Company began to lease approximately 1400
square feet of office space at 1401 Brickell Avenue, Miami, Florida 33131, at a
monthly rate of $3,300, which lease expires in October 2003. In addition,
beginning January 2000, the Company began to lease approximately 1600 square
feet of office space at 1215 Hightower Trail, Building B, Suite 220, Atlanta,
Georgia 30350, at a monthly rate of $2,317.66, which lease expires in February
2003. The Company pays no rent for its principal executive offices, which are
located at 3300 PGA Blvd., Suite 810, Palm Beach Gardens, Florida.
The Company considers its facilities to be reasonably insured and
adequate for its foreseeable needs and believes that similar facilities are
available in the Atlanta, Georgia and South Florida metropolitan areas at
comparable rental rates.
ITEM 3. Legal Proceedings
There are no outstanding legal proceedings, claims or litigation
against the Company.
ITEM 4. Submission of Matters to a Vote of Security Holders
No matters were submitted to a vote of stockholders during the fourth
quarter of the Company's 1999 fiscal year.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED
STOCKHOLDER MATTERS.
The Company's common stock, par value $0.01 per share ("Common Stock"),
is traded on the OTC Bulletin Board of the National Association of Securities
Dealers, Inc. under the symbol "VFIN."
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From October 8, 1992 through December 31, 1993, the Company's Common
Stock and warrants were trading on the NASDAQ SmallCap Market under the symbols
PFII and PFIIW, respectively, and on The Boston Stock Exchange under the symbols
PFI and PFIW, respectively. In January 1994, the Common Stock and Warrants were
de-listed from both exchanges. The Warrants expired in October 1995. From
January 1994 until November 18, 1998, there was no public trading market for the
Common Stock.
The following table sets forth the high and low bid information for the
Common Stock for the periods indicated below, as reported by the National
Quotation Bureau during such periods:
High Low
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1999
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1st Quarter $17.78 $1.97
2nd Quarter 9.88 0.02
3rd Quarter 5.56 0.63
4th Quarter 5.38 3.88
The foregoing quotations supplied by the National Quotations Bureau
reflect inter-dealer prices, without retail mark-up, mark-down or commission and
may not represent actual transactions.
The Company is authorized to issue 25,000,000 shares of Common Stock,
of which 9,109,400 shares were issued and outstanding as of March 27, 2000. The
Company is authorized to issue up to 2,500,000 shares of preferred stock, none
of which is currently issued and outstanding. The number of stockholders of
record for the Common Stock as of March 6, 2000 was 194.
The Company has not paid any cash dividends since inception, and it
does not anticipate paying any cash dividend in the foreseeable future.
The Company's transfer agent is North American Transfer Co., Freeport,
New York 11520.
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RECENT SALES OF UNREGISTERED SECURITIES
Certain transactions discussed below relate to transactions
consummated prior to November 8, 1999, the date of the Merger. Such disclosure
is included to provide information for the legal acquirer in the Merger
(Peachtree FiberOptics, Inc.). For accounting and financial reporting purposes
the Merger has been treated as a recapitalization (reverse acquisition) with
VFinance Holdings and Union Atlantic as the accounting acquirors.
Pursuant to an Investor Relations/Consulting Agreement between the
Company and EQUIS Capital Corp., dated December 1, 1999, the Company granted
EQUIS options to purchase up to 30,000 shares of Common Stock, vesting over a
six (6) month period at an exercise price ranging from $4.00 to $6.00 per share.
The options were granted in consideration for certain financial consulting
services to be provided by EQUIS to the Company and as such, will be amortized
into expense over the term of such agreement based on the fair value of the
options. The Company granted EQUIS certain piggyback and demand registration
rights with respect to the shares of Common Stock underlying the options. The
options issued to EQUIS were exempt from registration pursuant to Section 4(2)
of the Securities Act.
Pursuant to a Consulting Agreement between the Company and Stock
Exposure, Inc., dated January 29, 2000, on March 1, 2000, the Company issued
10,000 shares of Common Stock to Stock Exposure, Inc. in consideration for
certain consulting services to be provided by Stock Exposure, Inc. to the
Company. The Company will recognize expense of $11,000 during the first quarter
of 2000 based on the fair value of the stock. The shares issued to Stock
Exposure, Inc. were exempt from registration pursuant to Section 4(2) of the
Securities Act.
On October 15, 1999, the Company issued to Sidney Levine, a former
director, 343,666 shares of the Company's Common Stock in consideration for Mr.
Levine's prior services as a director of the Company. The shares issued to Mr.
Levine were exempt from registration pursuant to Section 4(2) of the Securities
Act.
On October 15, 1999, the Company issued to Stephen Krause 345,000
shares of Common Stock in consideration for certain consulting services provided
by Mr. Krause to the Company prior to August 16, 1999 and pursuant to a
consulting agreement dated August 16, 1999. The shares issued to Mr. Krause were
exempt from registration pursuant to Section 4(2) of the Securities Act.
As of March 27, 2000, there are options and warrants to purchase up to
1,695,000 shares of Common Stock held by Company's employees, consultants and
employees and consultants of the Company's subsidiaries outstanding. Such
options and warrants vest over a four year period and expire between 2002 and
2004. The per share exercise price ranges from $2.50 to $7.50. These options and
warrants were exempt from registration pursuant to Section 4(2) of the
Securities Act.
On September 27, 1999, the Company entered into a Stock Purchase
Agreement with River Rapids LTD, which was amended on December 22, 1999, whereby
the
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Company sold to River Rapids LTD 100,000 shares of Common Stock at $2.50 per
share and granted River Rapids LTD an option to acquire 210,000 shares of Common
Stock at an exercise price of $3.00 per share, 210,000 shares of Common Stock at
an exercise price of $4.00 per share and 210,000 shares of Common Stock at an
exercise price of $5.00 per share. Such options expire September 27, 2002. The
Company granted River Rapids LTD certain piggyback and demand registration
rights with respect to such shares of Common Stock and the Common Stock
underlying such options. The shares and options issued to River Rapids LTD were
exempt from registration pursuant to Section 4(2) of the Securities Act.
On December 24, 1999, the Company entered into an agreement to acquire
all of the membership interests of Pinnacle Capital Group, LC ("Pinnacle"), and
pursuant to such agreement, also entered into an employment agreement with each
of Steve Jacobs and Mauricio Borgonovo. The completion of this transaction is
subject to the NASD's approval of the change of ownership of Pinnacle, which is
currently pending. Pinnacle holds a broker/dealer license and is located in
Miami, Florida. The consideration consisted of the issuance of stock purchase
warrants to Messrs. Jacobs and Borgonovo giving such holders the right to
purchase 10,000 shares of Common Stock at an exercise price of $2.50 per share.
The warrants issued to Messrs. Jacobs and Borgonovo were exempt from
registration pursuant to Section 4(2) of the Securities Act.
On January 3, 2000, the Company acquired certain fixed and intangible
assets from Steve Jacobs and Mauricio Borgonovo used in connection with the
business operations of two former principals of Pinnacle. The consideration
consisted of the issuance of stock purchase warrants giving the holders the
right to purchase 190,000 shares of Common Stock at an exercise price of $2.50
per share. The warrants issued to Messrs. Jacobs and Borgonovo were exempt from
registration pursuant to Section 4(2) of the Securities Act.
On October 27, 1993 the Company agreed to pay to Genesis Partners, Inc.
("Genesis") as Managing Agent for the Company, $150,000 per year and to issue to
Leonard J. Sokolow, the controlling stockholder of Genesis, 10% of the
outstanding Common Stock on a fully diluted basis pursuant to a Management
Agreement (the "Management Agreement"). Payment of such compensation was
contingent upon the Company obtaining sufficient capital through a private
placement or a public offering and/or the completion of a merger or acquisition.
Pursuant to such agreement, on February 28, 1994, and February 15, 1995, the
Company issued to Mr. Sokolow 287,288 and 71,044 shares, respectively, of Common
Stock. This Management Agreement, as amended, expired on October 26, 1999. As of
December 31, 1998, management fees totaling $775,000 had been accrued by the
Company and were due and payable by the Company to Genesis. The Company
determined that in order to attract any viable financing and/or merger or
acquisition opportunities it would need to satisfy such outstanding fees payable
to Genesis without requiring any cash consideration. As a consequence, on March
18, 1999 the Company entered into a Debt Conversion Agreement with Genesis and
Mr. Sokolow. The Debt Conversion Agreement provided that Genesis could convert
in whole or in part $2.23 of such accrued fees for one share of Common Stock
(the "Conversion Ratio"), up to a maximum of $775,000 in accrued fees,
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which would result in a maximum of 348,185 shares of Common Stock issued to
Genesis upon full conversion of such $775,000 in accrued fees. Genesis further
agreed that, immediately preceding a merger, acquisition or financing by or of
the Company ("Reorganization Event"), any and all accrued fees not then
converted would be automatically converted ("Full Conversion") in their entirety
pursuant to the Conversion Ratio. Genesis and Mr. Sokolow also agreed to
forgive, release and forever discharge the Company for any and all other debt
that the Company incurred or may incur to Mr. Sokolow and/or Genesis with
respect to such Management Agreement including the management fee accrued
subsequent to December 31, 1998 through October 26, 1999, the expiration date of
the Management Agreement. Furthermore, immediately preceding a Reorganization
Event and after the Full Conversion, Mr. Sokolow and Genesis agreed to cancel
the Management Agreement and forever forgive, release and forever discharge the
Company from any and all obligations or fees which may be due under such
Management Agreement. Upon execution of the Debt Conversion Agreement on March
18, 1999, Genesis converted $75,000 of the accrued fees pursuant to the
Conversion Ratio into 33,696 shares of the Company's Common Stock. On July 13,
1999, Genesis converted the balance of $700,000 into 314,489 shares of the
Company's Common Stock. The securities issued to Genesis and Mr. Sokolow were
exempt from registration pursuant to Section 4(2) of the Securities Act.
On May 15, 1995, the Company obtained bridge financing in the aggregate
amount of $50,000 from two investors. In exchange for such financing, the
Company issued a promissory note in the principal amount of $25,000 each to the
two investors, bearing interest at 10% per annum. On October 18, 1999, the
holders of the notes converted such debt, including all accrued and unpaid
principal and interest, into 75,000 unregistered shares of Common Stock. The
shares issued to these investors were exempt from registration pursuant to
Section 4(2) of the Securities Act.
In October 1998 and May 1999, Mr. Sokolow and another investor each
provided $6,000 and $5,332 bridge loans to the Company. The Company used these
proceeds to pay professional fees and operating expenses. In exchange for such
financing, the Company issued promissory notes in the principal amount of $6,000
and $5,332 each to Mr. Sokolow and the investor. Such notes bear interest at the
rate of 10% per annum and are due and payable upon the merger of the Company
with, or acquisition of, another company or business. The notes to Mr. Sokolow
have been repaid. The notes to the other investor are still outstanding. The
notes issued to Mr. Sokolow and the investor were exempt from registration
pursuant to Section 4(2) of the Securities Act.
On August 16, 1999, the Company entered into a one (1) year Consulting
Agreement with Stephen Krause and Timothy Mahoney ("Consultants") to assist the
Company in identifying viable candidates with which the Company may merge and
possible acquisition candidates. At the request of the Company, the
Consultants agreed to assist in the management of any such candidates. In
consideration for their services, in August 1999, the Company issued 40,000
unregistered shares of Common Stock to Stephen Krause and 40,000 unregistered
shares of the Common Stock to Timothy Mahoney. Subsequent to
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such issuance, on November 8, 1999, Mr. Mahoney became the Chairman, Chief
Operating Officer and a principal shareholder of the Company. The shares issued
to the Consultants were exempt from registration pursuant to Section 4(2) of
the Securities Act.
As a result of the transactions discussed above, the Company had stock
options and stock purchase warrants outstanding to purchase 1,665,000 shares of
common stock at March 27, 2000.
Union Atlantic, LC manages, through a subsidiary, an offshore venture
capital fund (the "Fund"). The Fund's investors include Messrs. Sokolow and
Mahoney, whose aggregate ownership in the Fund represents less than 10% of such
Fund. In April 1998, the Fund loaned the Company $25,000. The note did not bear
interest and did not have a specified due date. On December 31, 1999, the
Company converted the outstanding balance of $25,000 into 8,400 shares of
Common Stock at an effective per share price of $2.98, in accordance with the
terms of a conversion agreement. The market value of the stock on the date of
issuance was $4.19 per share. Messrs. Sokolow and Mahoney disclaim any
beneficial interest in such 8,400 shares of Common Stock received by the Fund.
The shares were exempt from registration under Section 4(2) of the Securities
Act.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
YEAR ENDED DECEMBER 31, 1999 COMPARED TO THE YEAR ENDED DECEMBER 31, 1998
STATEMENTS OF OPERATIONS
The Company earns revenue from consulting fees and success fees related to
providing corporations and high net worth individuals with management and
access to capital resources for the purpose of expediting corporate
development. Consulting fees are billed to clients based primarily on agreed
upon monthly fees. Success fees are agreed upon amounts based on the percentage
of the total value of a transaction and are contingent on the successful
completion of a specified transaction. Consulting fees are deferred when
received and recognized when services are rendered, generally over the life of
an agreement. Success fees are recognized when earned, per the terms of the
contracts.
The Company also sells two types of memberships to its web site, vFinance.com:
(i) one-year memberships to venture capital vendors who are interested in
providing services to other companies or individuals; and (ii) three-month
memberships to entrepreneurs who have new business ideas to sell. The sale of
each type of membership is recorded as deferred revenue and amortized over the
life of the membership. Fees related to such memberships aggregated $20,174 and
$8,057 for the years ended December 31, 1999 and 1998, respectively, and
are included in other fees on the consolidated statements of income.
Operating revenues were $1,502,427 for the year ended December 31, 1999
compared to $1,716,997 for the year ended December 31, 1998, a decrease of
$214,570 or 12%. The decrease was primarily a result of lower success fee
revenue generated by the Company of $326,500 offset by increased consulting
revenue of $99,813. Success fees were lower than the prior year due to fewer
completed transactions with success fee arrangements. Management expects to
close more business transactions which will generate higher success fees in the
future.
Cost of revenues was $187,540 for the year ended December 31, 1999, compared to
$536,669 for the year ended December 31, 1998, a decrease of $349,129. Cost of
revenues decreased as a result of the decrease in success fees earned during the
year ended December 31, 1999.
General and administrative expenses were $346,260 for the year ended December
31, 1999, compared to $148,090 for the year ended December 31, 1998, an increase
of $198,170. The increase was primarily due to an increase in payroll of
approximately $63,700 and an increase in legal and accounting fees.
The provision for bad debts was $283,110 for the year ended December 31, 1999,
compared to $231,568 for the year ended December 31, 1998, an increase of
$51,542. The Company provides for credit losses at the time it believes accounts
receivable may not be collectible. Such evaluation is made and recorded on a
monthly basis. Credit losses have not exceeded management's expectations.
Amortization of non-cash deferred compensation aggregating $36,633 for the year
ended December 31, 1999, relates to the deferred compensation recorded in
connection with stock options granted to employees at prices less than fair
value and common stock grants. Compensation expense is being recognized over the
vesting period of the related stock options.
Interest expense aggregating $2,000 for the year ended December 31, 1998 relates
to debt that was outstanding during the year ended December 31, 1998. Interest
income aggregating $1,158 for the year ended December 31, 1999 relates to
amounts earned with respect to the Company's cash and cash equivalents.
The Company accounts for income taxes under the liability method in accordance
with Statement of Financial Accounting Standards No. 109, "ACCOUNTING FOR INCOME
TAXES." Under this method, deferred income tax assets and liabilities are
determined based on differences between the financial reporting and tax bases of
assets and liabilities and are measured using the enacted tax rates and laws
that will be in effect when the differences are expected to reverse.
Prior to the Merger, Union Atlantic, LC was a Florida limited liability company
and reported income for federal income tax purposes as a partnership under the
Internal Revenue Code. As a result, the individual partners were taxed on the
income of the Company for federal and state income tax purposes. Prior to 1998,
the State of Florida did not recognize limited liability company status, and the
Company recorded a state income tax provision, including providing for deferred
income taxes based on the differences between the tax bases and the financial
reporting basis of certain assets and liabilities. During 1998, the State of
Florida retroactively changed its laws to recognize limited liability company
status. Thus, the Company eliminated its deferred income taxes and recognized
such amounts in the statements of income.
The accompanying financial statements reflect an additional provision for
federal income taxes on a pro forma basis as if Union Atlantic, LC were liable
for federal income taxes as a taxable entity for the year ended December 31,
1998 and for the period from January 1, 1999 through November 8, 1999 (date of
Merger).
LIQUIDITY AND CAPITAL RESOURCES
The Company had $228,484 of cash and cash equivalents at December 31, 1999. For
the year ended December 31, 1999, cash provided by operating activities was
$837,630 compared to cash provided by operating activities of $724,838 for the
year ended December 31, 1998. Cash provided from operations related primarily to
net income in each year. Net cash provided by investing activities was $226,735
for the year ended December 31, 1999 compared to net cash used in investing
activities of $108,354 for the year ended December 31, 1998. On November 8,
1999, the Company (formerly Peachtree FiberOptics, Inc.) entered into a Share
Exchange Agreement providing for the acquisition of vFinance Holdings, Inc. and
Union Atlantic, LC. In connection with such transaction, the Company obtained
$224,121 of cash. In 1998, the Company acquired internal use software for
approximately $104,700. Net cash used in financing activities was $845,366 for
the year ended December 31, 1999 compared to $647,932 for the year ended
December 31, 1998. Such uses primarily related to cash distributions aggregating
$870,000 and $797,932 during the years ended December 31, 1999 and 1998 to the
former partners of Union Atlantic, LC prior to the Merger on November 8, 1999.
The Company anticipates that it will need additional debt or equity financing in
order to carry out its business strategy. Such strategy may be financed by bank
borrowings, public offerings, or private placements of equity or debt
securities, or a combination of the foregoing.
The Company does not have any material commitments for capital expenditures.
The Company's operations are not affected by seasonal fluctuations, however,
they are to some extent reliant on the continuation of mergers and acquisitions
and related financings in the entrepreneurial marketplace.
The Company does not believe its operations have been materially affected by
inflation.
11
<PAGE> 14
Item 7. Financial Staements.
Consolidated Financial Statements
vFinance.com, Inc.
(formerly Peachtree FiberOptics, Inc.)
AS OF DECEMBER 31, 1999 AND FOR THE YEARS ENDED
DECEMBER 31, 1998 AND 1999
WITH REPORT OF INDEPENDENT AUDITORS
12
<PAGE> 15
vFinance.com, Inc.
(formerly Peachtree FiberOptics, Inc.)
Consolidated Financial Statements
As of December 31, 1999 and for the Years ended
December 31, 1998 and 1999
CONTENTS
<TABLE>
<S> <C>
Report of Independent Auditors........................................................................14
Audited Financial Statements
Consolidated Balance Sheet............................................................................15
Consolidated Statements of Income ....................................................................16
Consolidated Statements of Shareholders' Equity.......................................................17
Consolidated Statements of Cash Flows.................................................................18
Notes to Consolidated Financial Statements............................................................19
</TABLE>
13
<PAGE> 16
Report of Independent Auditors
Board of Directors
vFinance.com, Inc.
We have audited the accompanying consolidated balance sheet of vFinance.com,
Inc. (formerly Peachtree FiberOptics, Inc.) as of December 31, 1999 and the
related consolidated statements of income, shareholders' equity, and cash flows
for the years ended December 31, 1999 and 1998. These consolidated financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of vFinance.com, Inc.
at December 31, 1999, and the results of its operations and its cash flows for
the years ended December 31, 1999 and 1998, in conformity with accounting
principles generally accepted in the United States.
/s/ Ernst & Young LLP
Atlanta, Georgia
March 10, 2000
14
<PAGE> 17
vFinance.com, Inc.
(formerly Peachtree FiberOptics, Inc.)
Consolidated Balance Sheet
<TABLE>
<CAPTION>
December 31,
1999
-----------
<S> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 228,484
Accounts receivable 233,306
Other assets 2,150
-----------
Total current assets 463,940
Equipment, at cost
Computer equipment 6,576
Internal use software 104,164
-----------
110,740
Less accumulated depreciation (89,061)
-----------
Net equipment 21,679
Goodwill 35,000
-----------
Total assets $ 520,619
===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 103,445
Accrued expenses 75,061
Deferred revenue 7,063
Distribution payable to Primary Shareholders 172,586
Advanced client costs due to Primary Shareholders 18,261
Advanced client costs 17,101
-----------
Total current liabilities 393,517
Shareholders' equity:
Common stock, $0.01 par value, 20,000,000 shares
authorized; 9,099,400 shares issued and outstanding 90,994
Additional paid-in capital 5,097,410
Deferred compensation (4,760,452)
Accumulated deficit (300,850)
-----------
Total shareholders' equity 127,102
-----------
Total liabilities and shareholders' equity $ 520,619
===========
</TABLE>
SEE ACCOMPANYING NOTES
15
<PAGE> 18
vFinance.com, Inc.
(formerly Peachtree FiberOptics, Inc.)
Consolidated Statements of Income
<TABLE>
<CAPTION>
Years Ended December 31
----------------------------
1998 1999
----------- ----------
<S> <C> <C>
Revenues:
Success fees $ 333,500 $ 7,000
Consulting fees 1,375,440 1,475,253
Other fees 8,057 20,174
----------- ----------
Total revenues 1,716,997 1,502,427
Cost of revenues 536,669 187,540
----------- ----------
Gross profit 1,180,328 1,314,887
General and administrative expenses 148,090 346,260
Provision for bad debts 231,568 283,110
Amortization of non-cash deferred compensation -- 36,633
----------- ----------
Operating income 800,670 648,884
Interest (expense) income (2,000) 1,158
Provision for state income taxes 1,925 --
=========== ==========
Net income $ 796,745 $ 650,042
=========== ==========
Pro forma provision for federal income taxes 299,011 297,914
----------- ----------
Pro forma net income $ 497,734 $ 352,128
=========== ==========
Pro forma earnings per share:
Basic $ 0.07 $ 0.05
=========== ==========
Weighted average number of common shares used in computing
basic earnings per share 6,678,836 7,254,638
=========== ==========
Diluted $ 0.07 $ 0.05
=========== ==========
Weighted average number of common shares used
in computing diluted earnings per share 6,678,836 7,284,026
=========== ==========
</TABLE>
SEE ACCOMPANYING NOTES.
16
<PAGE> 19
vFinance.com, Inc.
(formerly Peachtree FiberOptics, Inc.)
Consolidated Statements of Shareholders' Equity
<TABLE>
<CAPTION>
Retained
Common Stock Additional Earnings Total
-------------------- Paid-in Deferred (Accumulated Shareholders'
Shares Amount Capital Compensation Deficit) Equity
--------- ------- ----------- ------------ ------------- -----------
<S> <C> <C> <C> <C> <C> <C>
Balances at January 1, 1998 4,155,000 $41,550 $ (35,550) $ -- $ 92,881 $ 98,881
Issuance of 1,500,000 shares of common
stock in connection with asset
purchase 1,500,000 15,000 59,634 -- -- 74,634
Capital contribution to VFinance
Holdings, Inc. -- -- 75,000 -- -- 75,000
Retroactive recapitalization of VFinance
Holdings, Inc. in connection with
reverse acquisition 1,300,000 13,000 (13,000) -- -- --
Distributions to UAL Partners -- -- -- -- (797,932) (797,932)
Net income -- -- -- -- 796,745 796,745
--------- ------- ----------- ----------- ----------- -----------
Balances at December 31, 1998 6,955,000 69,550 86,084 -- 91,694 247,328
Merger with Peachtree FiberOptics, Inc. 1,362,500 13,625 210,496 (63,600) -- 160,521
Distributions to UAL Partners -- -- -- -- (1,042,586) (1,042,586)
Conversion of related party debt 8,400 84 35,080 -- -- 35,164
Issuance of common shares under the
restricted stock performance plan 773,500 7,735 3,821,090 (3,828,825) -- --
Warrants issued in connection with
acquisition of Pinnacle Capital
Group, LC -- -- 40,000 -- -- 40,000
Change in per share fair value of
common shares under restricted
stock performance plan -- -- 587,860 (587,860) -- --
Issuance of stock options and stock
purchase warrants -- -- 316,800 (316,800) -- --
Amortization of deferred compensation -- -- -- 36,633 -- 36,633
Net income -- -- -- -- 650,042 650,042
--------- ------- ----------- ----------- ----------- -----------
Balances at December 31, 1999 9,099,400 $90,994 $ 5,097,410 $(4,760,452) $ (300,850) $ 127,102
========= ======= =========== =========== =========== ===========
</TABLE>
SEE ACCOMPANYING NOTES.
17
<PAGE> 20
vFinance.com, Inc.
(formerly Peachtree FiberOptics, Inc.)
Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
Years Ended December 31
-------------------------
1998 1999
--------- ---------
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 796,745 $ 650,042
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization 35,303 63,424
Amortization of deferred compensation -- (36,633)
Non-cash stock compensation expense -- 10,164
Deferred income taxes 1,925 --
Changes in assets and liabilities:
Accounts receivable (95,671) 10,871
Income taxes receivable (2,325) 7,312
Other assets -- (2,150)
Accounts payable 6,925 70,070
Accrued expenses -- 75,061
Advanced client costs 13,141 (13,799)
Deferred revenue (31,205) 3,268
--------- ---------
Net cash provided by operating activities 724,838 837,630
INVESTING ACTIVITIES
Purchases of equipment (108,354) (2,386)
Cash acquired in connection with purchase of a business -- 5,000
Cash acquired in reverse acquisition of Peachtree
FiberOptics, Inc. -- 224,121
--------- ---------
Net cash (used in) provided by investing activities (108,354) 226,735
FINANCING ACTIVITIES
Issuance of note payable 50,000 --
Repayment of note payable -- (25,000)
Proceeds from issuance of common stock 25,000 49,634
Capital contribution 75,000 --
Distributions to partners (797,932) (870,000)
--------- ---------
Net cash used in financing activities (647,932) (845,366)
Increase (decrease) in cash and cash equivalents (31,448) 218,999
Cash and cash equivalents at beginning of year 40,933 9,485
--------- ---------
Cash and cash equivalents at end of year $ 9,485 $ 228,484
========= =========
Interest paid $ 2,000 $ --
========= =========
</TABLE>
SEE ACCOMPANYING NOTES
18
<PAGE> 21
vFinance.com, Inc.
(formerly Peachtree FiberOptics, Inc.)
Notes to Consolidated Financial Statements
December 31, 1998 and 1999
1. SIGNIFICANT ACCOUNTING POLICIES AND OTHER MATTERS
DESCRIPTION OF BUSINESS
vFinance.com, Inc. ("the Company") (formerly Peachtree FiberOptics, Inc.),
through its wholly owned subsidiaries VFinance Holdings, Inc. and Union Atlantic
LC, is a "new-media" enterprise focused on providing business development tools
and information, primarily to companies throughout the United States.
vFinance Holdings, Inc. ("VFin") consists of a venture capital vertical portal
website focused on providing business development tools, information, products
and services to assist entrepreneurs and executives of small and medium sized
enterprises to organize and grow their businesses.
Union Atlantic LC ("Union Atlantic" or "UAL) is a management consulting firm
which provides corporations and high net worth individuals with management and
access to capital resources for the purpose of expediting corporate development.
UAL specializes in the technology industry. UAL had managed an offshore venture
capital fund which was partially owned by certain members of the Company's
senior management team. Such fund is inactive.
On November 8, 1999, Peachtree FiberOptics entered into a Share Exchange
Agreement providing for the acquisition of VFin and UAL (the "Merger").
Peachtree FiberOptics, Inc. exchanged 2,800,000 shares of its common stock for
all of the outstanding shares of VFin and 4,155,000 shares of its common stock
for all outstanding membership interests in UAL. For accounting purposes, the
acquisitions have been treated as a recapitalization (reverse acquisition) with
VFin and UAL as the acquirors. VFin and UAL were considered entities under
common control prior to the Merger. The Merger qualified as a tax-free exchange
under section 351 of the Internal Revenue Code of 1986.
19
<PAGE> 22
vFinance.com, Inc.
(formerly Peachtree FiberOptics, Inc.)
Notes to Consolidated Financial Statements (continued)
December 31, 1998 and 1999
1. SIGNIFICANT ACCOUNTING POLICIES AND OTHER MATTERS (continued)
DESCRIPTION OF BUSINESS (continued)
The historical financial statements prior to November 8, 1999, are the combined
statements of VFin and UAL. Unaudited pro forma information giving effect to the
Merger as if it occurred on January 1, 1998 is as follows:
<TABLE>
<CAPTION>
Years Ended December 31
---------------------------
1998 1999
---------- -----------
<S> <C> <C>
Revenues $1,716,997 $ 1,502,427
Net income (loss) 435,226 (462,000)
Basic earnings (loss) per share $ 0.07 $ (0.06)
Weighted average shares outstanding used in
computing basic earnings (loss) per share 6,678,836 7,254,638
Diluted earnings (loss) per share $ 0.07 $ (0.06)
Weighted average shares outstanding used in
computing diluted earnings (loss) per share 6,678,836 7,254,638
</TABLE>
(1) Includes approximately $809,000 of non-cash compensation expense related to
amounts recorded on Peachtree FiberOptics, Inc.'s statement of operations prior
to November 8, 1999.
REVENUE RECOGNITION
UAL earns revenue from consulting fees and success fees. Consulting fees are
deferred when received and recognized when services are rendered, generally over
the life of an agreement. Success fees are agreed upon amounts based on the
percentage of the total value of a transaction and are contingent on the
successful completion of a specified transaction. These fees are recognized when
earned, per the terms of the contracts. UAL does not require collateral from its
customers. UAL's revenues are not concentrated in any particular region of the
country or with any individual or group.
20
<PAGE> 23
vFinance.com, Inc.
(formerly Peachtree FiberOptics, Inc.)
Notes to Consolidated Financial Statements (continued)
December 31, 1998 and 1999
1. SIGNIFICANT ACCOUNTING POLICIES AND OTHER MATTERS (continued)
REVENUE RECOGNITION (CONTINUED)
UAL periodically receives equity instruments and warrants from companies for
which it performs services, in addition to the cash paid for such services.
Primarily all of the equity instruments are in private companies with no readily
available market value. Equity interests and warrants for which there is not a
public market are valued based on factors such as significant equity financing
by sophisticated, unrelated new investors, a history of positive cash flow from
operations, the market value of comparable publicly traded companies (discounted
for illiquidity) and other pertinent factors. Management also considers recent
offers to purchase a portfolio company's securities and the filings of
registration statements in connection with a portfolio company's initial public
offering when valuing warrants. During the years ended December 31, 1998 and
1999, the Company received equity investments from three and one companies,
respectively. Due to the factors indicated above, no revenue was recognized in
connection with the receipt of equity instruments in the years ended December
31, 1998 and 1999. Prior to the Merger, upon receipt of such equity instruments
all such instruments were immediately distributed to the UAL partners, in
accordance with the distribution terms of the UAL Operating Agreement.
Subsequent to the Merger no such equity instruments were received.
For equity instruments and warrants received in public companies, the Company
recognizes revenue equal to the fair value on the date of receipt, discounted
for any defined restrictions on the equity instruments or warrants. During 1999,
but prior to the Merger, $17,312 of revenue was recognized by UAL in connection
with equity instruments received from public companies. Such instruments were
distributed to UAL's shareholders upon receipt.
At December 31, 1999, certain transactions in process may result in UAL
receiving equity instruments as discussed above. In such event, the Company will
record revenues related to the receipt of such equity instruments at fair value.
In addition, the Company would also record compensation expense at fair value
related to the distribution of some or all of such equity instruments to
employees or independent contractors involved with the related transaction.
21
<PAGE> 24
vFinance.com, Inc.
(formerly Peachtree FiberOptics, Inc.)
Notes to Consolidated Financial Statements (continued)
December 31, 1998 and 1999
1. SIGNIFICANT ACCOUNTING POLICIES AND OTHER MATTERS (continued)
REVENUE RECOGNITION (CONTINUED)
VFin sells two types of memberships to its website: (i) one year memberships to
venture capital vendors, who are interested in providing services to other
companies or individuals; and (ii) three-month memberships to entrepreneurs who
have new business ideas to sell. The sale of each type of membership is recorded
as deferred revenue and amortized over the life of the membership. VFin's
revenues are not concentrated in any particular region of the country or with
any individual or group. Fees related to such memberships are included in "other
fees" in the statements of income for the years ended December 31, 1998 and
1999.
Primarily all membership sales are consummated using an on-line credit card
processing service, which performs routine credit verification. VFin does not
require collateral and receives payment directly from the credit card company.
Thus, there is potential for credit losses. Credit losses aggregated $4,465 for
the year ended December 31, 1998. There were no credit losses for the year ended
December 31, 1999.
HTM Logic was the original owner and designer of the vFinance.com website prior
to VFin's acquisition of such website and maintains a legend on the website
indicating as such. The terms of the purchase agreement related to VFin's
acquisition of the website provided that VFin would receive a referral fee equal
to 25% of all income earned by HTM Logic from business generated as a result of
the website legend. No such revenue was earned by VFin for the years ended
December 31, 1998 and 1999.
22
<PAGE> 25
vFinance.com, Inc.
(formerly Peachtree FiberOptics, Inc.)
Notes to Consolidated Financial Statements (continued)
December 31, 1998 and 1999
1. SIGNIFICANT ACCOUNTING POLICIES AND OTHER MATTERS (continued)
BASIS OF PRESENTATION
The consolidated balance sheet includes the accounts of the Company and its
wholly-owned subsidiaries. All intercompany accounts have been eliminated in
consolidation. References to the statement of income for the year ended December
31, 1998 in the financial statements and the notes thereto include the results
of operations of UAL for the year ended December 31, 1998 and the results of
operations of VFin for the period from inception (February 5, 1998) through
December 31, 1998. The statement of income for the year ended December 31, 1999
includes the results of operations of UAL and VFin for the year ended December
31, 1999 and the results of operations of Peachtree FiberOptics, Inc. for the
period from November 8, 1999 (date of Merger) through December 31, 1999.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts reported in the accompanying financial statements. Actual
results may differ from those estimates, and such differences may be material to
the financial statements.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents include all highly liquid investments with a maturity
of three months or less when purchased.
ADVERTISING COSTS
Advertising costs are expensed as incurred. Total advertising expense amounted
to $11,736 and $3,539 for the years ended December 31, 1998 and 1999,
respectively.
23
<PAGE> 26
vFinance.com, Inc.
(formerly Peachtree FiberOptics, Inc.)
Notes to Consolidated Financial Statements (continued)
December 31, 1998 and 1999
1. SIGNIFICANT ACCOUNTING POLICIES AND OTHER MATTERS (continued)
STOCK BASED COMPENSATION
The Company has elected to follow Accounting Principles Board Opinion No. 25,
ACCOUNTING FOR STOCK ISSUED TO EMPLOYEES ("APB 25"), and related interpretations
in accounting for its employee stock options and stock purchase warrants because
the alternative fair value accounting provided for under Statement of Financial
Accounting Standards No. 123, ACCOUNTING FOR STOCK BASED COMPENSATION ("SFAS
123"), requires the use of option valuation models that were not developed for
use in valuing employee stock options. Under APB 25, if the exercise price of
the Company's employee stock options equals or exceeds the market price of the
underlying stock on the date of grant no compensation expense is recognized.
FINANCIAL INSTRUMENTS
The fair value of the Company's financial instruments, which includes cash and
cash equivalents, accounts receivable, accrued expenses, notes payable and
advanced client costs approximates their carrying values.
The Company's financial instruments that are exposed to concentrations of credit
risk consist primarily of cash and cash equivalents and accounts receivable. The
Company places its cash with high quality financial institutions.
EQUIPMENT AND INTANGIBLE ASSETS
Equipment is stated on the basis of cost less accumulated depreciation and
consists primarily of computer equipment and internal use software. Depreciation
is computed using the straight-line method over the estimated useful lives of
the assets, 2-3 years, for financial reporting purposes.
24
<PAGE> 27
vFinance.com, Inc.
(formerly Peachtree FiberOptics, Inc.)
Notes to Consolidated Financial Statements (continued)
December 31, 1998 and 1999
1. SIGNIFICANT ACCOUNTING POLICIES AND OTHER MATTERS (continued)
EQUIPMENT AND INTANGIBLE ASSETS (continued)
The carrying values of intangible assets as well as other long-lived assets are
reviewed if the facts and circumstances suggest that they may be impaired. If
this review indicates that the assets will not be recoverable, as determined
based on the undiscounted estimated cash flows of the Company over the remaining
amortization period, the Company's carrying values of the assets would be
reduced to their estimated fair values.
INCOME TAXES
The Company accounts for income taxes under the liability method in accordance
with Statement of Financial Accounting Standards No. 109, "ACCOUNTING FOR INCOME
TAXES". Under this method, deferred income tax assets and liabilities are
determined based on differences between the financial reporting and tax bases of
assets and liabilities and are measured using the enacted tax rates and laws
that will be in effect when the differences are expected to reverse.
Prior to the Merger, UAL was a Florida limited liability company and reported
income for federal income tax purposes as a partnership under the Internal
Revenue Code. As a result, the individual partners were taxed on the income of
the Company for federal and state income tax purposes. Prior to 1998, the State
of Florida did not recognize limited liability company status, and the Company
recorded a state income tax provision, including providing for deferred income
taxes based on the differences between the tax basis and the financial reporting
basis of certain assets and liabilities. During 1998, the State of Florida
retroactively changed its laws to recognize limited liability company status.
Thus, the Company eliminated its deferred income taxes and recognized such
amounts in the statements of income.
The accompanying financial statements reflect an additional provision for
federal income taxes on a pro forma basis as if UAL were liable for federal
income taxes as a taxable entity for the year ended December 31, 1998 and for
the period from January 1, 1999 through November 8, 1999 (date of Merger).
25
<PAGE> 28
vFinance.com, Inc.
(formerly Peachtree FiberOptics, Inc.)
Notes to Consolidated Financial Statements (continued)
December 31, 1998 and 1999
1. SIGNIFICANT ACCOUNTING POLICIES AND OTHER MATTERS (continued)
DISTRIBUTIONS TO UAL PARTNERS
Prior to the Merger, UAL made frequent cash distributions to its partners based
on cash flow availability. These distributions were occasionally in the form of
accounts receivable collected by the partners. In order to maintain equity
balances approximately equal to the original percentages set forth in the UAL
Operating Agreement, UAL periodically made non-cash adjustments to the equity
accounts, upon the consent of the partners. Prior to the Merger, UAL declared
distributions payable to two of its three partners equal to substantially all of
UAL's retained earnings. At December 31, 1999, distributions payable aggregating
$172,586 were owed to the former UAL partners.
STATEMENT OF CASH FLOWS
Non cash items affecting the Statement of Cash Flows are as follows:
<TABLE>
<CAPTION>
1998 1999
---------- ----------
<S> <C> <C>
Retroactive recapitalization of VFinance Holdings, Inc. due to
reverse acquisition $ 13,000 $ --
Deferred compensation recorded in connection with common stock
issued related to restricted stock performance plan -- 3,828,825
Change in fair market value of stock issued in connection
with restricted stock performance plan -- 587,860
Issuance of stock options and stock purchase warrants -- 316,800
Conversion of related party debt to common stock -- 25,000
</TABLE>
26
<PAGE> 29
vFinance.com, Inc.
(formerly Peachtree FiberOptics, Inc.)
Notes to Consolidated Financial Statements (continued)
December 31, 1998 and 1999
1. SIGNIFICANT ACCOUNTING POLICIES AND OTHER MATTERS (continued)
EARNINGS PER SHARE
The Company calculates earnings per share in accordance with Statement of
Financial Accounting Standards No. 128, EARNINGS PER SHARE ("SFAS No. 128"). In
accordance with SFAS No. 128, basic earnings per share is computed using the
weighted average number of shares of common stock outstanding and diluted
earnings per share is computed using the weighted average number of shares of
common stock and the dilutive effect of options and warrants outstanding, using
the "treasury stock" method.
2. ACQUISITIONS
On December 24, 1999, the Company acquired the membership interests of Pinnacle
Capital Group, LC ("Pinnacle") for $40,000 and subsequently entered into
employment agreements with the former Pinnacle partners (See Note 9). The
acquisition was accounted for under the purchase method of accounting. Pinnacle
holds a broker/dealer license and is located in Miami, Florida. The
consideration consisted of the issuance of stock purchase warrants giving the
holders the right to purchase 10,000 shares of the Company's common stock at an
exercise price of $2.50 per warrant. The warrants had a fair value, based on the
Black Scholes model, of $4.00 per warrant. The warrants vest immediately and are
exercisable for a period of five years, at the discretion of the holders. The
Company allocated the purchase price based on the fair value of the assets
acquired (cash aggregating $5,000) with the remainder of such purchase price
allocated to goodwill. Goodwill related to this acquisition is being amortized
over two years concurrent with the terms of the employment agreements.
3. RELATED PARTY TRANSACTIONS
UAL had managed, through a subsidiary, an offshore venture capital fund (the
"Fund"). The Fund is no longer active. The Fund's investors include the Primary
Shareholders of the Company. In April 1998, the Fund loaned the Company $25,000
through a verbal agreement. The note did not bear interest and did not have a
specified due date. On December 31, 1999, the Company converted the outstanding
balance of $25,000 into
27
<PAGE> 30
vFinance.com, Inc.
(formerly Peachtree FiberOptics, Inc.)
Notes to Consolidated Financial Statements (continued)
December 31, 1998 and 1999
3. RELATED PARTY TRANSACTIONS (continued)
8,400 shares of the Company's common stock at an effective per share price of
$2.98, in accordance with the terms of the conversion agreement. The fair market
value of the stock on the date of issuance was $4.19 per share. Accordingly, the
Company recognized $10,164 as non-cash compensation expense, equal to the
difference between the contractually agreed price per share and the market price
per share at the date of conversion.
VFin executed a management agreement (the "Management Agreement") with a former
shareholder of MD Information Systems (the "Managing Agent"), the previous owner
of the vFinance.com website. Under the terms of the Management Agreement, the
Managing Agent was appointed President and Chief Executive Officer of VFin with
the authority to manage its operations. Under the terms of the Management
Agreement, the Managing Agent received $33,000 and $36,000 of fees for the years
ended December 31, 1998 and 1999. On December 31, 1999, the Management Agreement
and the Managing Agent were terminated.
The former shareholder of MD Information System was granted 100,000 stock
options in VFin. In connection with the Merger such stock options were converted
into 20,000 shares of the Company's common stock at fair value, accordingly, no
compensation expense was recorded in connection with such conversion.
On November 8, 1999, the Company entered into three year employment agreements
(the "Agreements") with the Company's Chief Executive Officer and Vice Chairman,
who holds 34% of the total outstanding common shares of the Company and the
Company's President and Chairman, who holds 34% of the total outstanding common
shares of the Company (collectively the "Primary Shareholders"). Under the terms
of the Agreements, which are renewable as directed by a majority vote of the
board of directors, each individual shall receive (i) an initial base salary of
$150,000 per annum for the first year with a 5% increase per annum beginning one
year from the date of the Agreements (the Company's board of directors may
increase such salaries at their discretion); (ii) discretionary bonuses as
determined by the Company's board of directors primarily based on each
individuals performance; (iii) incentive compensation paid monthly equal to
Available Cash, as defined, primarily based on performance of the Company; and
(iv) in the event the Company does not put into place by June 1, 2000 the
issuance of
28
<PAGE> 31
vFinance.com, Inc.
(formerly Peachtree FiberOptics, Inc.)
Notes to Consolidated Financial Statements (continued)
December 31, 1998 and 1999
3. RELATED PARTY TRANSACTIONS (continued)
Class A Common Stock, each individual will receive 500,000 stock options with
grant prices equal to 120% of fair value with vesting provisions as defined in
the Agreements. The Agreements also contain provisions related to severance and
change of control upon the occurrence of certain events.
4. ADVANCED CLIENT COSTS
As part of its operations, UAL's employees incur expenses that are reimbursable
by its clients. These expenses are recorded when incurred and submitted for
reimbursement by the employees, as an account receivable from the client and a
liability to the employee. At such point payment is received, the employee is
reimbursed for the expenses. The amounts expected to be collected from the
client are recorded as a reduction of accounts receivable. Amounts deemed
uncollectible by management are recorded as liabilities.
5. INCOME TAXES
Deferred income taxes reflect the effect of temporary differences between the
carrying amounts of the assets and liabilities for financial reporting purposes
and amounts used for income taxes. As discussed in Note 1, the Florida law
changed regarding limited liability companies and all state income taxes became
the responsibility of the UAL partners, individually until the Merger date.
Thus, the Company's provision for income taxes consists of income taxes based on
the results of operations of VFin from January 1, 1999 through the Merger date
and the results of operations of the Company from the Merger date through
December 31, 1999.
29
<PAGE> 32
vFinance.com, Inc.
(formerly Peachtree FiberOptics, Inc.)
Notes to Consolidated Financial Statements (continued)
December 31, 1998 and 1999
5. INCOME TAXES (continued)
The provision for income taxes consisted of the following:
<TABLE>
<CAPTION>
Years Ended December 31,
------------------------------
1998 1999
------------ ------------
<S> <C> <C>
State:
Current $ -- $ --
Deferred 1,925 --
------------ ------------
Total $ 1,925 $ --
============ ============
</TABLE>
Deferred income taxes reflect the net tax effect of temporary differences
between the carrying amounts of the assets and liabilities for financial
reporting purposes and amounts used for income taxes. The Company's deferred
income tax assets consist of the following:
<TABLE>
<CAPTION>
December 31,
------------------------------
1998 1999
------------ ------------
<S> <C> <C>
Unearned revenue $ -- $ 2,472
Depreciation -- 11,943
Net operating loss carryforward -- 27,130
Deferred income tax asset valuation allowance -- (41,545)
------------ ------------
Net deferred income tax asset $ -- $ --
============ ============
</TABLE>
Net operating loss carryforwards totaled $77,515 at December 31, 1999. The net
operating loss carryforwards will begin to expire in the year 2019 if not
utilized. After consideration of all the evidence, both positive and negative,
management has recorded a valuation allowance at December 31, 1999 due to the
uncertainty of realizing the deferred income tax assets.
30
<PAGE> 33
vFinance.com, Inc.
(formerly Peachtree FiberOptics, Inc.)
Notes to Consolidated Financial Statements (continued)
December 31, 1998 and 1999
5. INCOME TAXES (continued)
Net operating losses aggregating approximately $3,514,000 generated by Peachtree
FiberOptics, Inc., prior to the Merger, will not be utilized for book purposes
due to the Merger and in connection with Internal Revenue Code Section 382 have
limited use for income tax purposes.
6. EMPLOYMENT AGREEMENTS
On December 17, 1999, the Company entered into employment agreements with three
individuals. In connection with the employment agreements the Company issued
773,500 shares of its common stock. However, the shares are subject to
divestment and return to the Company in the event and to the extent that certain
performance criteria and/or other employment conditions are not met. The shares
issued to the employees are being held in escrow and will be held in escrow
until (i) cessation of the employee's employment with the Company prior to
December 31, 2000, in which event all of the shares would be immediately
returnable to the Company or (ii) the employee fails to meet certain cash
revenue goals by February 15, 2001, as defined by the employment agreements, in
which event the shares, or a percentage of such shares, would be immediately
returnable to the Company, based on a formula contained in each employment
agreement.
The employment agreements have been accounted for as restricted stock
performance plans. In a restricted stock performance plan, the nature of the
restriction results in the compensation cost being measured at the date when the
number of shares to be awarded is known. Consequently, the measurement of
compensation at the date the performance criteria are met, measures the ultimate
compensation to be recognized by the Company. These employment agreements are
variable plans, therefore, interim estimates of compensation will be required
based on the combination of the fair market value of the common stock as of the
end of the reporting period and the extent or degree of compliance with the
performance criteria. Accordingly, in connection with the employment agreements
the Company recorded deferred compensation aggregating $3,828,825, based on the
fair market value of the Company's common stock at December 17, 1999. At
December 31, 1999, the Company recorded an additional $587,860 of deferred
compensation based on the fair market value of the Company's common stock at
31
<PAGE> 34
vFinance.com, Inc.
(formerly Peachtree FiberOptics, Inc.)
Notes to Consolidated Financial Statements (continued)
December 31, 1998 and 1999
6. EMPLOYMENT AGREEMENTS (continued)
December 31, 1999. No compensation expense was recognized for the year ended
December 31, 1999, because the measurement period related to the performance
criteria does not begin until February 15, 2000. Due to the contingency related
to the issuance of such shares, none of these shares are indicated in the
computation of basic or diluted earnings per share.
7. STOCK OPTIONS AND STOCK PURCHASE WARRANTS
The Company has elected to follow Accounting Principle Board Opinion No. 25,
ACCOUNTING FOR STOCK ISSUED TO EMPLOYEES ("APB 25"), and related interpretations
in accounting for its employee stock options because the alternative fair value
accounting provided under FASB Statement No. 123, ACCOUNTING FOR STOCK-BASED
COMPENSATION, ("SFAS 123") requires the use of option valuation models that were
not developed for use in valuing employee stock options. As permitted by the
Standard, the Company adopted the disclosure alternative of SFAS 123. Under APB
25, when the exercise price of the Company's stock options equals or exceeds the
fair value of the underlying stock on the date of grant, no compensation expense
is recorded.
A summary of the stock option activity is as follows:
<TABLE>
<CAPTION>
Weighted
Number Exercise Average
of Price Per Exercise
Shares Option Price
--------- ------------- -------------
<S> <C> <C> <C> <C>
Outstanding options at
January 1, 1999 -- -- --
Granted 1,065,000 $2.50 - $6.00 $ 4.19
---------
Outstanding options at
December 31, 1999 1,065,000
=========
</TABLE>
32
<PAGE> 35
vFinance.com, Inc.
(formerly Peachtree FiberOptics, Inc.)
Notes to Consolidated Financial Statements (continued)
December 31, 1998 and 1999
7. STOCK OPTIONS AND STOCK PURCHASE WARRANTS (continued)
The following table summarizes information concerning stock options outstanding
at December 31, 1999:
<TABLE>
<CAPTION>
Weighted
Average Remaining
Exercise Number Contractual
Price Outstanding Life (in years)
-------- ----------- ------------------
<S> <C> <C>
$ 2.50 75,000 4.8
3.00 210,000 5.0
4.00 220,000 5.0
4.13 30,000 5.0
4.95 300,000 5.0
5.00 220,000 5.0
6.00 10,000 5.0
---------
1,065,000
=========
</TABLE>
Options granted to employees are exercisable according to the terms of each
agreement, ranging from one month to four years. At December 31, 1999, 9,000
options outstanding were exercisable. At December 31, 1999, 1,075,000 shares of
the Company's common shares are reserved for issuance related to stock options
and stock purchase warrants which were outstanding at December 31, 1999.
Pro forma information regarding net income is required by SFAS 123, which also
requires that the information be determined as if the Company has accounted for
its employee stock options under the fair value method. The fair value for
options granted was estimated at the date of grant using the Black Scholes
option pricing model with the following weighted-average assumptions: risk-free
interest rates ranging from 5.93% to 6.18%; no dividend yields; volatility
factor of the expected market price of the Company's common stock of 6.552 for
options issued prior to the Merger and 1.194 for options issued subsequent to
the Merger; and an expected life of the options of 5 years.
33
<PAGE> 36
vFinance.com, Inc.
(formerly Peachtree FiberOptics, Inc.)
Notes to Consolidated Financial Statements (continued)
December 31, 1998 and 1999
7. STOCK OPTIONS AND STOCK PURCHASE WARRANTS (continued)
At December 31, 1999, the weighted average fair value of the options granted
during 1999 equaled $4.19 per share. For purposes of pro forma disclosures, the
estimated fair value of the options is amortized to expense over the options'
vesting periods. The Company's pro forma net income for 1998 and 1999 was
$796,745 and $560,334, respectively. The Company's pro forma basic and diluted
earnings per share for 1998 and 1999 was $0.12 and $0.08, respectively.
The Company recorded deferred compensation of $187,500 during 1999 in connection
with the grants of employee stock options with exercise prices lower than the
deemed fair value per share of the Company's common stock on the date of the
grant. Such amounts are being amortized over the vesting period, and
accordingly, $22,500 of compensation expense was recognized in 1999 relative to
employee options.
On December 1, 1999, the Company entered into an agreement with a company
providing financial consulting services, (the "Financial Services Agreement").
The Financial Services Agreement is for a term of six months with six month
renewals based upon mutual consent. The Financial Services Agreement provides
for a monthly retainer and the grant of 30,000 stock options which vest at a
rate of 5,000 shares per month beginning one month from the date of grant. The
options have exercise prices ranging from $4.00 to $6.00 and are exercisable for
a period of five years. The Company recorded deferred compensation of $129,300
at December 31, 1999, which will be amortized over the term of the agreement.
On September 27, 1999, the Company (formerly, Peachtree FiberOptics, Inc.)
entered into a Stock Purchase Agreement with River Rapids LTD which was amended
on December 22, 1999, whereby the Company sold to River Rapids LTD 100,000
shares of the Company's common stock at $2.50 per share and granted River Rapids
an option to acquire 210,000 shares of common stock at $3.00 per share, 210,000
shares of common stock at $4.00 per share, and 210,000 shares of common stock at
$5.00 per share. Such options expire September 27, 2002.
34
<PAGE> 37
vFinance.com, Inc.
(formerly Peachtree FiberOptics, Inc.)
Notes to Consolidated Financial Statements (continued)
December 31, 1998 and 1999
8. EARNINGS PER SHARE
The following table sets forth the computation of pro forma basic and diluted
earnings per share (in thousands except per share amounts) for the years ended
December 31, 1998 and 1999:
<TABLE>
<CAPTION>
1998 1999
----------- ----------
<S> <C> <C>
Numerator:
Pro forma net income $ 497,734 $ 352,128
=========== ==========
Denominator:
Denominator for basic earnings per share-
weighted average shares 6,678,836 7,254,638
Effect of dilutive securities:
Options -- 5,955
Warrants -- 23,433
----------- ----------
Dilutive potential common shares (1) -- 29,388
----------- ----------
Denominator for diluted earnings per share-
adjusted weighted average shares 6,678,836 7,284,026
=========== ==========
Pro forma basic earnings per share $ 0.07 $ 0.05
=========== ==========
Pro forma diluted earnings per share $ 0.07 $ 0.05
=========== ==========
</TABLE>
(1) Stock options aggregating 530,000 shares of common stock at December 31,
1999, were outstanding but were not included in the computation of pro
forma diluted earnings per share at December 31, 1999 because the exercise
price was greater than the average market price of the common shares, and
therefore, the effect would be antidilutive.
35
<PAGE> 38
vFinance.com, Inc.
(formerly Peachtree FiberOptics, Inc.)
Notes to Consolidated Financial Statements (continued)
December 31, 1998 and 1999
9. SUBSEQUENT EVENTS
On January 3, 2000, the Company entered into an asset purchase agreement and
employment agreements with two individuals, who were former partners in
Pinnacle, for the term of three years. The assets purchased were furniture and
fixtures owned individually by the key personnel. The consideration consisted of
the issuance of stock purchase warrants giving the holders the right to purchase
190,000 shares of the Company's common stock at an exercise price of $2.50 per
warrant. The fair value of the stock purchase warrants, based on the Black
Scholes model, is $4.00 per warrant. The Company recognized deferred
compensation of $285,000 which will be amortized over the term of the employment
agreements. The warrants are exercisable for a period of five years, at the
discretion of the holders. In addition, the Company granted each individual
100,000 stock options at $5.00 per share and 100,000 stock options at $7.50 per
share. Such options vest according to the terms of the employment agreement.
On January 6, 2000, the Company entered into an employment agreement, granting
the employee options to purchase 30,000 shares of its common stock, after a
three month probationary period at a per share exercise price of $5.00. The
options vest at a rate of 7,500 shares per year beginning after the first
anniversary of the employee's employment. As the grant price of the options
equaled fair value no compensation expense was recorded.
Effective March 13, 2000, the Company increased the authorized common shares
from 20,000,000 to 25,000,000. In addition, the Company established Blank Check
preferred stock, authorizing 2,500,000 preferred shares.
Subsequent to December 31, 1999, the Company's Board of Directors authorized
management to pursue the issuance of approximately 2.3 million shares of the
Company's common stock for an aggregate purchase price of approximately $7.0
million in connection with a private placement.
On March 13, 2000, Peachtree FiberOptics, Inc. changed its name to vFinance.com,
Inc.
36
<PAGE> 39
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
NONE
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTORS AND CONTROL PERSONS; COMPLIANCE
WITH SECTION 16(a) OF THE EXCHANGE ACT.
The following table sets forth the names, ages and positions of the executive
officers and directors of the Company as of March 27, 2000. Under the Company's
bylaws, each director holds office until the election and qualification of his
successor or until his earlier resignation or removal.
<TABLE>
<CAPTION>
Name Age Position
---- --- --------
<S> <C> <C>
Leonard J. Sokolow 43 Chief Executive Officer, Vice Chairman of the
Board of Directors
Timothy Mahoney 43 Chairman of the Board of Directors, Chief
Operating Officer
Michael Sandler 31 Vice President, Secretary, Treasurer
David Spector 34 Vice President
</TABLE>
LEONARD J. SOKOLOW. Mr. Sokolow has been a director of the Company
since November 8, 1997. Since November 8, 1999, Mr. Sokolow has been the Chief
Executive Officer and Vice Chairman of the Board of Directors. Since September
1996, Mr. Sokolow has been President of Union Atlantic, LC ("UALC"), a merchant,
banking and strategic consulting firm specializing domestically and
internationally in technology industries. UALC is a wholly-owned subsidiary of
the Company. Since August 1993, Mr. Sokolow has been President of Genesis
Partners, Inc., a private financial business consulting firm. From August 1994
through December 1998, Mr. Sokolow was the Chairman and Chief Executive Officer
of the Americas Growth Fund, Inc., a public closed-end management investment
company. Mr. Sokolow presently serves as a director of Catalina Lighting, Inc.,
a designer, manufacturer and distributor
37
<PAGE> 40
of lighting fixtures and lamps traded on the New York Stock Exchange. Mr.
Sokolow also serves as a director of Advanced Electronics Support Products,
Inc., a worldwide distributor and manufacturer of active and passive networking
components traded on Nasdaq. In addition, Mr. Sokolow serves as a director of
Ezcony Interamerica, Inc., a distributor of major brand name consumer
electronics to Latin America traded on the OTC Bulletin Board. Mr. Sokolow
received a B.A. degree with majors in Economics and Accounting from the
University of Florida in 1977, a J.D. degree from The University of Florida
School of Law in 1980 and an L.L.M. (Taxation) degree from The New York
University Graduate School of Law in 1982. Mr. Sokolow is a Certified Public
Accountant.
TIMOTHY MAHONEY. Timothy E. Mahoney has been a director of the Company
since November 8, 1999. Since November 8, 1999, Mr. Mahoney has also been the
Chairman of the Board and Chief Operating Officer of the Company. Since
September 1996, Mr. Mahoney has been a partner of UALC. From 1994 through 1995,
Mr. Mahoney was President of the Highlands Group. Mr. Mahoney was a founder of
the consumer products business for SyQuest Technology. In 1986, Mr. Mahoney
founded and was the President of Rodime Systems, a computer disk drive
sub-system manufacturer. Mr. Mahoney was also the Vice President of Marketing
and Sales for Tecmar, the first PC add-in board company. Mr. Mahoney spent eight
years in marketing and sales management in the computer timesharing business
with Computer Sciences Corporation, Automatic Data Processing and General
Electric Information Services. Mr. Mahoney received a B.A. degree with majors in
Computer Science and Business from the West Virginia University in 1978. Mr.
Mahoney received a Masters of Business Administration from George Washington
University in 1983.
MICHAEL SANDLER. Since November 8, 1999, Mr. Sandler has been Vice
President, Secretary and Treasurer of the Company. Since March of 1998, Mr.
Sandler has worked as an independent consultant for UALC. From 1995 through
1998, Mr. Sandler was a partner in R.B.R. Premium Finance Company and a partner
in A Plus Discount Insurance. Mr. Sandler received a B.A. degree with a major in
Economics from the University of Rochester in 1990 and a Masters in Business
Administration from the University of North Carolina in 1994.
DAVID SPECTOR. Since November 8, 1999, Mr. Spector has been Vice
President of the Company. From 1995 through 1999, Mr. Spector served as
Vice-President and regional creative director of Green Advertising, a division
of London-based WPP Group plc, where he managed the creative efforts of the
agency. Prior to that, Mr. Spector was a copywriter with Greenstone Roberts
Advertising, with conceptual responsibilities for Royal Caribbean Cruise Lines
and Radisson Hotels.
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Section 16(a) of the Exchange Act requires the Company's directors and
executive officers, and persons who beneficially own more than ten percent (10%)
of a registered class of the Company's equity securities, to file with the
Securities and Exchange Commission ("SEC") initial reports of ownership and
reports of changes in ownership of Common Stock and the other equity securities
of the Company. Officers, directors and persons who beneficially own more
38
<PAGE> 41
than ten percent (10%) of a registered class of the Company's equity securities
are required by the regulations of the SEC to furnish the Company with copies of
all Section 16(a) forms they file. To the Company's knowledge, based solely on
review of these filings and written representations from the directors and
officers, as of the date hereof, there are no transactions for which the
officers, directors and significant stockholders have not timely filed the
appropriate form under Section 16(a) of the Exchange Act.
ITEM 10. EXECUTIVE COMPENSATION.
<TABLE>
<CAPTION>
Annual Compensation Long Term Compensation
------------------------------------- -----------------------
Other Securities
Annual Underlying
Name/Position Year Salary Bonus Compensation Options
------------- ---- ------ ----- ------------ ------------------------
<S> <C> <C> <C> <C> <C>
Leonard J. Sokolow (1) 1999 $24,200 $5,600 $2,000 --
CEO, Vice Chairman 1998 -- -- -- --
1997 -- -- -- --
Timothy Mahoney 1999 $26,200 -- $2,000 --
COO, Chairman 1998 -- -- -- --
1997 -- -- -- --
Michael Sandler 1999 -- -- -- --
Vice President 1998 -- -- -- --
Secretary, Treasurer 1997 -- -- -- --
-- -- --
David Spector, Vice President 1999 75,000
1998 -- -- -- --
1997 -- -- -- --
</TABLE>
- ----------
(1) From October 1993 through November 1999, Mr. Sokolow rendered supervisory
and management services to the Company on behalf of the Company's Managing
Agent, Genesis Partners, Inc. In such capacity, Mr. Sokolow did not receive any
cash compensation but Genesis Partners, Inc., of which Mr. Sokolow is President,
CEO and a controlling shareholder, was issued a total of 350,000 shares of
Common Stock in consideration for serving as the managing agent of the Company.
OPTIONS/SAR GRANTS IN LAST FISCAL YEAR
Individual Grants
<TABLE>
<CAPTION>
Number of
Securities Percent of Total
Underlying Options/SARs Granted Exercise of
Options/SARs to Employees in SARs Price
Name Granted Fiscal Year ($/Share) Expiration Date
---- ------------ --------------------- ------------ ----------------
<S> <C> <C> <C> <C>
Leonard Sokolow -- -- -- --
Timothy Mahoney -- -- -- --
Michael Sandler -- -- -- --
David Spector (1) 75,000 8.99% $ 2.50 10/29/04
</TABLE>
- ----------
(1) The options to purchase up to 75,000 shares of Common Stock granted to Mr.
Spector on October 29, 1999 vest as follows: 3,000 shares underlying the option
vest on a monthly basis, with the first 3,000 vested on the date of grant. The
fair market value of the shares underlying the options on the date of grant was
$187,500.
39
<PAGE> 42
COMPENSATION OF DIRECTORS
Directors do not receive any compensation for serving on the Company's
Board of Directors.
EMPLOYMENT AGREEMENTS
On November 8, 1999, the Company entered into three year employment
agreements (the "Agreements") with the Company's Chief Executive Officer and
Vice Chairman, who holds 34% of the total outstanding common shares of the
Company and the Company's President and Chairman, who holds 34% of the total
outstanding common shares of the Company (collectively the "Primary
Shareholders"). Under the terms of the Agreements, which are renewable as
directed by a majority vote of the board of directors, each individual shall
receive (i) an initial base salary of $150,000 per annum for the first year
with a 5% increase per annum beginning one year from the date of the Agreements
(the Company's board of directors may increase such salaries at their
discretion); (ii) discretionary bonuses as determined by the Company's board of
directors primarily based on each individuals performance; (iii) incentive
compensation paid monthly equal to Available Cash, as defined, primarily based
on performance of the Company; and (iv) in the event the Company does not put
into place by June 1, 2000 the issuance of Class A Common Stock, each
individual will receive 500,000 stock options with grant prices equal to 120%
of fair value with vesting provisions as defined in the Agreements. The
Agreements also contain provisions related to severance and change of control
upon the occurrence of certain events.
On October 29, 1999, the Company entered into a letter agreement with
David Spector. Pursuant to the letter agreement, the Company agreed to pay Mr.
Spector an annual base salary of $75,000 and to grant to Mr. Spector options to
acquire up to 75,000 shares of Common Stock at an exercise price of $2.50 per
share. The options vest over a two-year period, subject to Mr. Spector's
continuing to be an employee of the Company, and expire on October 28, 2004. The
Company intends to register the shares of Common Stock underlying the options.
Mr. Spector is also entitled to receive a bonus and incentives pursuant to any
incentive programs established by the Company for its employees.
40
<PAGE> 43
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The following table sets forth Common Stock ownership information as of
March 27, 2000 with respect to (i) each person known to the Company to be the
beneficial owner of more than 5% of the Company's Common Stock; and (ii) each
officer and director of the Company; and (iii) all directors and officers as a
group. This information as to beneficial ownership was furnished to the Company
by or on behalf of the persons named. Unless otherwise indicated, the business
address of each person listed is 3300 PGA Blvd., Suite 810, Palm Beach Gardens,
Florida. Information with respect to the percent of class is based on 9,109,400
issued and outstanding shares of Common Stock as of March 27, 2000.
<TABLE>
<CAPTION>
Percent of
Name and Address of Beneficial Owner Amount and Nature of Beneficial Ownership (1) Class(2)
- ------------------------------------ --------------------------------------------- ----------
<S> <C> <C>
Genesis Partners, Inc. (3) 3,106,518 34%
Highlands Group Holdings, Inc. (4) 2,175,000 24%
Insinger Venture Capital Limited (5) 948,334 10%
Timothy Mahoney (6) 3,108,333 34%
</TABLE>
41
<PAGE> 44
<TABLE>
<CAPTION>
Percent of
Name and Address of Beneficial Owner Amount and Nature of Beneficial Ownership (1) Class(2)
- ------------------------------------ --------------------------------------------- ----------
<S> <C> <C>
Michael Sandler (7) 100,000 1%
Leonard Sokolow (8) 3,108,333 34%
David Spector (9) 24,000 *
All executive officers and directors as a 6,340,666 70%
group (four persons)
</TABLE>
- ----------
*Denotes less than 1% ownership.
(1) Except as otherwise indicated in the footnotes below, each stockholder has
sole power to vote and dispose of all the shares of Common Stock listed
opposite his name.
(2) For purposes of this table, each person is deemed to have "beneficial
ownership" of any shares of Common Stock which such person has the right to
acquire on or within 60 days after March 27, 2000. For purposes of
computing the percentage of Common Stock held by each person named above,
any shares which such person has or has the right to acquire on or within
60 days after March 27, 2000 are deemed outstanding for such person, but
are not deemed to be outstanding for the purpose of computing the
percentage ownership of any other person.
(3) Genesis Partners, Inc., whose address is 2458 Provence Court, Weston,
Florida 33327, is a corporation controlled by Mr. Leonard Sokolow, Chief
Executive Officer and Vice Chairman of the Company.
(4) Highlands Group Holdings, Inc., whose address is 68 Cayman Place, Palm
Beach Gardens, Florida 33418, is wholly-owned by Mr. Timothy Mahoney,
Chairman and Chief Operating Officer of the Company.
(5) Insinger Venture Capital Limited is a wholly owned subsidiary of Insinger
Bank and formerly known as Insinger Venture Capital Fund, Limited. Its
address is P.O. Box 438, Tropic Isle Building, Wickhams Cay Road, Tortola,
Virgin Islands.
(6) Mr. Timothy Mahoney is Chairman and Chief Operating Officer of the Company.
Mr. Mahoney, as the owner of Highlands Group Holdings, Inc., is deemed to
beneficially own the 2,175,000 shares held by Highlands Group Holdings,
Inc.
(7) Mr. Michael Sandler is Vice President, Secretary and Treasurer of the
Company. The shares are owned by both Mr. Sandler and Sarah Sandler, his
wife, as tenants by the entirety.
(8) Mr. Sokolow is Vice Chairman and Chief Executive Officer of the Company.
Mr. Sokolow controls Genesis Partners, Inc., and is deemed the beneficial
owner of the 3,106,518 shares held by Genesis Partners, Inc.
(9) Mr. David Spector, a Vice President of the Company, has been granted
options to purchase up to 75,000 shares of Common Stock, an aggregate of
24,000 which have vested or will vest within 60 days after March 27, 2000.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Union Atlantic, LC manages, through a subsidiary, an offshore venture
capital fund (the "Fund"). The Fund's investors include Messrs. Sokolow and
Mahoney, whose aggregate ownership in the Fund represents less than 10% of such
Fund. In April 1998, the Fund loaned the Company $25,000 through a verbal
agreement. The note did not bear interest and did not have a specified due date.
On December 31, 1999, the Company converted the outstanding balance of $25,000
into 8,400 shares of the Common Stock at an effective per share price of $2.98,
in accordance with the terms of a conversion agreement. The market value of the
stock on the date of issuance was $4.19 per share. Messrs. Sokolow and Mahoney
disclaim any beneficial interest in such 8,400 shares of Common Stock received
by the Fund. The Fund is currently inactive.
From October 1993 through November 8, 1999, Mr. Sokolow rendered
supervisory and management services to the Company on behalf of the Company's
Managing Agent, Genesis Partners, Inc. In such capacity, neither Mr. Sokolow nor
Genesis Partners, Inc. received any cash compensation. Mr. Sokolow and Genesis
Partners, Inc. of which Mr. Sokolow is President, CEO and a controlling
shareholder, were issued a total of 1,815 and 348,185 shares of Common
42
<PAGE> 45
Stock, respectively, in consideration for serving as the Managing Agent of the
Company since October 1993 without cash compensation and upon conversion of
$775,000 in unpaid fees due and owing the Managing Agent by the Company. See
Item 5. Recent Sales of Unregistered Securities.
43
<PAGE> 46
PART IV
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K.
(a) EXHIBITS
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
------- ----------------------
2.1 Share Exchange Agreement among the Company, vFinance Holdins,
Inc., certain shareholders of vFinance Holdings, Inc. and
Union Atlantic LC, dated November 8, 1999 (incorporated by
reference to the Company's Current Report on Form 8-K filed
with the SEC on November 8, 1999).
2.2 Amendment to Share Exchange Agreement dated November 29, 1999.
3.1 Certificate of Incorporation as filed with the Delaware
Secretary of State on February 12, 1992 (incorporated by
reference to the Company's Registration Statement on Form S-18
filed with the SEC on July 24, 1992).
3.2 Certificate of Renewal and Revival of Certificate of
Incorporation as filed with the Delaware Secretary of State on
March 15, 1996.
3.3 Certificate of Amendment to the Certificate of Incorporation
as filed with the Delaware Secretary of State on April 28,
1999.
3.4 Certificate of Amendment to Certificate of Incorporation as
filed with the Delaware Secretary of State on March 13, 2000.
3.5 Bylaws of the Company (incorporated by reference to the
Company's Registration Statement on Form S-18 filed with the
SEC on July 24, 1992).
3.6 Unanimous Written Consent of the Company's Board of Directors,
dated January 24, 1994, amending the Bylaws.
3.7 Unanimous Written Consent of the Company's Board of Directors,
effective as of January 24, 1994, amending the Bylaws.
10.1 Consulting Agreement between the Company and Stock Exposure
Inc., dated January 29, 2000.
10.2 Investor Relations/Consulting Agreement between the Company
and EQUIS Capital Corp. dated December 1, 1999.
44
<PAGE> 47
10.3 Agreement with Sidney Levine (incorporated by reference to the
Company's registration statement on Form S-8 filed with the
SEC on November 22, 1999).
10.4 Consulting Agreement between the Company and Stephen Krause
dated August 27, 1999 (incorporated by reference to the
Company's registration statement on Form S-8 filed with the
SEC on November 22, 1999).
10.5 Employment Agreement between the Company and Leonard J.
Sokolow dated November 8, 1999.
10.6 Employment Agreement between the Company and Timothy Mahoney
dated November 8, 1999.
10.7 Employment Offer Letter from the Company to David Spector
dated October 29, 1999.
10.8 Letter Agreement between Union Atlantic Partners I, Ltd.,
vFinance Holdings, Inc. and the Company dated December 31,
1999.
10.9 Purchase Agreement between the Company and Steven Jacobs and
Mauricio Borgonovo, dated December 24, 1999, for the purchase
of Pinnacle Capital Group, LLC.
10.10 Asset Purchase Agreement among the Company, Steven Jacobs and
Mauricio Borgonovo dated January 3, 2000.
10.11 Asset Purchase Agreement among the Company, Andrew Reckles,
Paul T. Mannion and Vincent Sbarra, dated November 17, 1999.
10.12 Consulting Agreement between the Company and Atlas, Pearlman,
Trop & Borkson, P.A., dated July 16, 1999 (incorporated by
reference to the Company's registration statement on Form S-8
filed with the SEC on November 22, 1999).
10.13 Debt Conversion Agreement among the Company, Genesis Partners,
Inc. and Leonard Sokolow, dated March 18, 1999 (incorporated
by reference to the Company's annual report on Form 10-KSB
filed with the SEC on March 25, 1999).
10.14 Stock Purchase Agreement between the Company and River Rapids
Ltd., dated September 27, 1999.
10.15 Amendment to Stock Purchase Agreement between the Company and
River Rapids Ltd. dated December 22, 1999.
10.16 Consulting Agreement among the Company, Stephen Krause and
Timothy Mahoney, dated August 16, 1999 (incorporated by
reference to the Company's registration statement on Form S-8
filed with the SEC on August 19, 1999).
45
<PAGE> 48
21 List of Subsidiaries.
23 Consent of Ernst & Young LLP
27 Financial Data Schedule
(b) REPORTS ON FORM 8-K
The Company filed a current report on Form 8-K with the SEC on November
24, 1999, and filed an amendment thereto on January 24, 2000.
46
<PAGE> 49
SIGNATURES
In accordance with section 13 or 15(d) of the Exchange Act, the registrant has
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
vFinance.com, Inc.
By: /s/ Leonard J. Sokolow
-----------------------------------------
Leonard J. Sokolow,
Chief Executive Officer and Vice Chairman
In accordance with the Exchange Act, this report has been signed by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
/s/ Leonard J. Sokolow
- --------------------------------- Chief Executive Officer and March 29, 2000
Leonard J. Sokolow Vice Chairman of the Board of
Directors
/s/ Timothy Mahoney
- --------------------------------- Chief Operating Officer March 29, 2000
Timothy Mahoney Chairman of the Board of Directors
/s/ Michael Sandler
- --------------------------------- Vice President, Secretary March 29, 2000
Michael Sandler and Treasurer
/s/ David Spector
- --------------------------------- Vice President March 29, 2000
David Spector
</TABLE>
47
<PAGE> 1
Exhibit 2.2
AMENDMENT TO
SHARE EXCHANGE AGREEMENT
THIS AMENDMDENT TO SHARE EXCHANGE AGREEMENT ("this Agreement") is made
and entered into as of this 29th day of November, 1999 by and among PEACHTREE
FIBEROPTICS, INC., a Delaware corporation ("PFI"), VFINANCE HOLDINGS, INC., a
Florida corporation ("VHI") and the shareholders of VHI listed on the
counterpart signature pages hereto constituting all of the shareholders of VHI
(collectively, "VHI Shareholders"); and UNION ATLANTIC LC a Florida limited
liability company ("UALC"), and the members of UALC listed on the counterpart
signature pages hereto constituting all of the members of UALC (collectively,
"UALC Members").
RECITALS:
A. PFI, VHI, VHI Shareholders, Union Atlantic LC and UALC Members
(collectively, the "Parties") desire to amend the Share Exchange Agreement dated
as November 8, 1999 by the between them (the "Share Exchange Agreement") with
respect to the Class B Shares referenced in such Share Exchange Agreement.
B. The Parties have been advised by counsel to PFI that the Class B
Share structure creates undue corporate governance issues beyond that which was
contemplated by the Parties.
C. The Parties intended to provide the holders of the Class B Shares
common the ability to control the Board of Directors which ability should be
reduced commensurate with the reduction in ownership of such Class B common and
whereas the Parties do not desire to create two classes on the Board one of
which would be elected by the holders of the Class B Shares and the other by the
Common Share owners.
D. The Parties have been advised of a more effective structure to
accomplish such intention by legal counsel to PFI.
E. The Parties desire to amend the Share Exchange Agreement to provide
such effective structure.
NOW, THEREFORE, in consideration of the mutual covenants, agreements,
representations and warranties contained in this Agreement, the parties,
intending to be legally bound, agree as follows:
1.1 CLASS B SHARES REFERENCES. All references to Class B Shares in the
Share Exchange Agreement and all Schedules and Exhibits thereto shall be deleted
in its entirety and replaced in all instances with "Class A Common Stock". Any
and all corporate governance/voting characteristics associated with such Class B
Shares prior to such amendment which are described in the Share Exchange
Agreement and all Schedules and Exhibits thereto shall be deleted in their
entirety. Any and all references to the "Class A Common Stock" shall be deemed
to include the corporate governance/voting characteristics of the Class A Common
Stock described in Paragraphs 5.1 and 5.2 as amended herein.
1.2 AMENDMENT TO PARAGRAPHS 5.1 AND 5.2. Paragraphs 5,1 and 5.2 of the
Share Exchange Agreement shall be deleted in their entirety and replaced with
the following provisions:
5.1 ORGANIZATION AND GOOD STANDING. PFI is a corporation duly
organized, validly existing and in good standing under the laws of the
State of Delaware, and is entitled to own or lease its properties and
to carry on its business as and in the places where such properties are
now owned, leased, or operated and such business is now conducted. The
authorized capital stock of PFI presently consists of 20,000,000 shares
of Common Stock, of which 546,334 shares are issued and outstanding as
of September 30, 1999, with obligations by PFI is issue an additional
778,666 shares plus various grants of options or warrants prior to,
concurrent with, or following the Exchanges. Within 150 days after the
closing of this transaction, PFI shall amend its Articles of
Incorporation to permit the issuance of the Class A Common Stock. Since
<PAGE> 2
the issuance of the Class A Common Stock has not been authorized prior
to the date of this Agreement, PFI shall issue to the UALC Members
shares of PFI stock common in the same amounts to the UALC Members
designated to receive the Class A Common Stock as set forth on Exhibit
B; and, immediately following the due authorization of the Class A
Common Stock, each of the UALC Members designated to receive the Class
A Common Stock will be entitled to exchange those shares of PFI common
stock for an equivalent number of Class A Common Stock. PFI is duly
licensed or qualified and in good standing as a foreign corporation
where the character of the properties owned by PFI or the nature of the
business transacted by it make such license or qualification necessary.
5.2 THE CLASS A COMMON STOCK. The Class A Common Stock to be issued to
the UALC Members (and any shares of common stock issued prior to the
authorization of the Class A Common Stock) described in Exhibit B have
been or will have been duly authorized by all necessary corporate and
shareholder actions and, when so issued in accordance with the terms of
this Agreement, will be validly issued, fully paid and non-assessable.
The Class A Common Stock, par value $.01, will consist of 6,250,000
authorized shares. The Class A Common Stock shall be convertible on a
share for share basis into the Common Stock of the Company.
Furthermore, the Class A Common Stock holders shall be entitled to five
votes per share of Class A Common Stock in the election of the Board of
Directors, voting with the common shareholders as a single class; and
shall be entitled to one vote per one share of Class A voting rights on
all matters submitted to the common shareholders, voting with the
common shareholders as a single class, except as otherwise provided by
law. A majority vote of the Class A Common Stock holders and a majority
of the Common Shareholders, in addition to a resolution of a majority
of the Board of Directors, shall be required to increase the maximum
number of directors of the corporation. The parties to this Agreement
have the effect of delaying, deferring or making more expensive or
difficult a change in control.
2. COUNTERPARTS. This Amendment may be executed in any number of
counterparts, each of which, when so executed, will constitute an original copy
hereof, but all of which together will be considered but one and the same
document.
3. OTHER PROVISIONS. All other provisions of the Share Exchange
Agreement shall remain in full force and effect.
IN WITNESS WHEREOF, the parties have executed this Amendment as of the
date first above written.
PEACHTREE FIBEROPTICS, INC.
By: /s/ Signey Levine
----------------------------------------
Sidney Levine, Director and
Authorized Representative
VFINANCE HOLDINGS, INC.
By: /s/ Leonard J. Sokolow
----------------------------------------
Leonard J. Sokolow, President
VHI SHAREHOLDERS:
INSINGER VENTURE CAPITAL LIMITED
By: /s/ F.M.C Limited, Director
----------------------------------------
________________Authorized Representative
<PAGE> 3
GENESIS PARTNERS, INC.
By: /s/ Leonard J. Sokolow
-------------------------------------
Leonard J. Sokolow, President
TIMOTHY MAHONEY
By: /s/ Timothy Mahoney
-------------------------------------
Timothy Mahoney
UNION ATLANTIC LC
By: /s/ Timothy Mahoney
-------------------------------------
Timothy Mahoney, Member and
Authorized Representative
UALC MEMBERS:
BAYARD MANAGEMENT SERVICES (BVI) LIMITED
By: /s/ Martin Crespel
--------------------------------------
Sole Director, Authorized Representative
GENESIS PARTNERS, INC.
By: /s/ Leonard J. Sokolow
--------------------------------------
Leonard J. Sokolow, President
HIGHLANDS GROUP
By: /s/ Timothy Mahoney
-------------------------------------
Timothy Mahoney
<PAGE> 1
Exhibit 3.2
CERTIFICATE
FOR
RENEWAL AND REVIVAL
OF
CERTIFICATE OF INCORPORATION
Peachtree Fiberoptics, Inc., a corporation organized under the laws of
Delaware, the Certificate of Incorporation of which was filed in the office of
the Secretary of State on the 12th day of February, 1992 and thereafter voided
for non-payment of taxes, now desiring to produce a revival of its Certificate
of Incorporation, hereby certifies as follows:
1. The name of the corporation is Peachtree Fiberoptics, Inc.
2. Its registered office in the State of Delaware is located at
Corporation Trust Center, 1209 Orange Street, City of Wilmington, County of New
Castle and the name of its registered agent at such address is The Corporation
Trust Company.
3. The date when revival of the Certificate of Incorporation of this
corporation is to commence is the 28th day of February, 1995, same being prior
to the date the Certificate of Incorporation became void. Revival of the
Certificate of Incorporation is to be perpetual.
4. This corporation was duly organized under the laws of Delaware and
carried on the business authorized by its Certificate of Incorporation until
the 1st day of March, 1995, at which time its Certificate of Incorporation
became inoperative and void for non-payment of taxes and this Certificate for
Renewal and Revival is filed by authority of the duly elected directors of the
corporation in accordance with the laws of Delaware.
IN WITNESS WHEREOF, said Peachtree Fiberoptics, Inc. in compliance with
Section 312 of Title 8 of the Delaware Code has caused this Certificate to be
signed by Leonard J. Sokolow, its last and acting Managing Agent, this 15th day
of March, 1996.
Peachtree Fiberoptics, Inc.
By: /s/ Leonard J. Sokolow
-------------------------------
Leonard J. Sokolow
Last and Acting Managing Agent
<PAGE> 1
Exhibit 3.3
CERTIFICATE OF AMENDMENT
TO
CERTIFICATE OF INCORPORATION
OF
PEACHTREE FIBEROPTICS, INC.
Peachtree FiberOptics, Inc., a corporation organized and existing under and
by virtue of the General Corporation Law of the State of Delaware, (the
"Corporation"), DOES HEREBY CERTIFY:
FIRST: By the unanimous consent of the directors of the Corporation a
resolution was duly adopted setting forth a proposed amendment to the
Certificate of Incorporation of said corporation, declaring said amendment
to be advisable and seeking the consent of the majority of the shareholders
of said corporation to adopt such amendment to the Certificate of
Incorporation, pursuant to Sections 228 and 242 of the Delaware General
Corporation Law. The resolution setting forth the proposed amendment is as
follows:
RESOLVED, that ARTICLE IV of the Certificate of Incorporation be amended to
include the following provision:
Effective upon the Corporation filing an Amendment to the Certificate of
Incorporation ("Effective Date") in the office of the Secretary of State of
Delaware, each 197.44092 shares of Common Stock, $.01 par value per share,
outstanding on the Effective Date will be changed into one (1) fully paid
and nonassessable share of Common Stock, $.01 par value per share; and that
after the Effective Date, each holder of record of one or more certificates
representing shares of the old Common Stock shall be entitled to receive
one or more certificates representing the proportionate number of shares of
new Common Stock on surrender of a stockholder's old certificates for
cancellation. If a stockholder shall be entitled to a number of new shares
of Common Stock which is not a whole number, then the number of new shares
of Common Stock issued to the Stockholder shall be rounded up to the
nearest whole number in lieu of such fractional share.
SECOND: that a majority of the Stockholders have given their written
consent to the above amendments in lieu of a meeting in accordance with the
provisions of Section 228 of the Delaware General Corporation Law;
THIRD: that the aforesaid amendment shall be duly adopted in accordance
with the applicable Section 242 and 228 of the Delaware General Corporation
Law.
FOURTH: that the capital of the Corporation shall not be reduced under or
by reason of said amendment.
FIFTH: that this amendment shall become effective upon its filing in the
office of the Secretary of State of Delaware, and the record date being
March 19, 1999 for the for 197.44092 reverse stock split of the Company's
issued and outstanding shares of Common Stock.
IN WITNESS WHEREOF, the Corporation has caused its corporate seal to be
hereunto affixed and this Certificate to be signed by its President and
Secretary, this 22nd day of April, 1999.
PEACHTREE FIBEROPTICS, INC.
Attest: /s/ Sidney Levine, BY: /s/ Leonard Sokolow
-------------------------- -------------------------------
Sidney Levine, Secretary Leonard Sokolow, Managing Agent
<PAGE> 1
Exhibit 3.4
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
PEACHTREE FIBEROPTICS, INC.
Peachtree Fiberoptics, Inc. (the "Corporation") a corporation organized
and existing under and by virtue of the General Corporation Law of the State of
Delaware, DOES HEREBY CERTIFY
FIRST: That the Board of Directors of the Corporation has adopted a
resolution proposing and declaring advisable an Amendment to the Certificate of
Incorporation of the Corporation changing the name of the Corporation to
"vfinance.com, Inc.".
RESOLVED, that the Certificate of Incorporation of Peachtree
Fiberoptics, Inc. be amended by changing Article I thereof, so
that, as amended, said Article I shall be and read as follows:
The name of the Corporation is "vFinance.com, Inc.".
SECOND: That the Board of Directors of the Corporation has adopted a
resolution proposing and declaring advisable an Amendment to the Certificate of
Incorporation of the Corporation restructuring the capitalization of the
Corporation by (i) increasing the authorized Common Stock from 20,000,000 shares
to 25,000,000 shares, and (ii) establishing a "blank check" preferred stock
consisting of 2,500,000 shares.
RESOLVED, that the Certificate of Incorporation of Peachtree
Fiberoptics, Inc. be amended by deleting Article IV in its
entirety and in lieu thereof inserting a new Article IV to
reflect the restructured capitalization of the Corporation
which shall incorporate the following language:
"The total number of shares of all classes of stock which the
Corporation shall have the authority to issue is 27,500,000
consisting of the following:
(A) COMMON STOCK. The Common Stock of the Corporation shall
consist of 25,000,000 Shares of Common Stock, $.01 par value
per share.
(B) PREFERRED STOCK. There may be authorized up to Two Million
Five Hundred Thousand Shares (2,500,000) of preferred stock
which may be created and issued from time to time, with such
designations, preferences, conversion rights, cumulative,
relative, participating, optional or other rights, including
voting rights, qualifications, limitations or restrictions
thereof as shall be stated and expressed in the resolution or
resolutions providing for the creation and issuance of such
preferred stock as adopted by the Board of Directors pursuant
to the authority in this paragraph given.
<PAGE> 2
THIRD: That in lieu of a meeting and vote of stockholders, the holders
of outstanding shares of common stock having not less than the minimum number of
votes which would be necessary to authorized to take such action at a meeting at
which all shares entitled to vote thereon were present and voted have given
their written consent to said amendment in accordance with the provisions of
Section 228 of the General Corporation Law of the State of Delaware.
FOURTH: That the aforesaid amendments were duly adopted in accordance
with the applicable provisions of Section 242 and Section 228 of the General
Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, the Corporation has caused this Certificate to be
signed by Leonard Sokolow, its President, this 13th day of March, 2000.
PEACHTREE FIBEROPTICS, INC.
By: /s/ Leonard Sokolow
---------------------------------
Leonard Sokolow, President
CEO and Vice Chairman of
Peachtree Fiberoptics, Inc.
<PAGE> 1
Exhibit 3.6
ACTION OF UNANIMOUS WRITTEN CONSENT
OF THE BOARD OF DIRECTORS OF
PEACHTREE FIBEROPTICS INC.
The undersigned members of the Board of Directors ("Board") of PEACHTREE
FIBEROPTICS, INC. (the "Corporation"), a Delaware corporation, do hereby
unanimously agree, consent to and adopt the following corporate actions pursuant
to section 141 of the Delaware General Corporation Law. The undersigned do
hereby waive all formal requirements, including the necessity of holding a
formal or informal meeting, and any requirement that notice of such meeting be
given. The undersigned hereby adopt the following corporate resolutions:
RESOLVED, in accordance with Section 5.2(a) of Article V of the By-Laws of
the Corporation ("By-Laws"), Sidney Levine, the sole director of the
Corporation hereby nominates, appoints and approves the following two
persons: Leonard J. Sokolow and Joel E. Marks to serve as directors of this
Corporation, who have accepted such appointment;
RESOLVED FURTHER, that the Board (consisting of the following persons:
Sidney Levine, Leonard J. Sokolow and Joel E. Marks) deems it in the best
interest of the Corporation to amend the By-Laws to change the minimum
number of directors of the Corporation from three (3) to one (1); and in
furtherance thereof, hereby modifies the first sentence of Section 3.2 of
Article III of the By-Laws as it currently reads and adopts the following
to replace such sentence;
3.2 NUMBER AND QUALIFICATIONS. The number of directors shall be not
less than one (1) and not more than seven (7), the exact number within
such minimum and maximum limits to be fixed and determined from time
to time by resolution of a majority of the Board of Directors.
RESOLVED FURTHER, that Leonard J. Sokolow and Joel E. marks hereby resign
as directors of the Corporation; and that the Board (consisting of Sidney
Levine) hereby accepts such resignations;
IN WITNESS WHEREOF, the undersigned directors of the Corporation have
executed the foregoing corporate action for the purpose of giving their consent
thereto effective as of the 24th day of January 1994.
/s/ Sidney Levine
----------------------------------------
Sidney Levine
/s/ Leonard J. Sokolow
----------------------------------------
Leonard J. Sokolow
/s/ Joel E. Marks
----------------------------------------
Joel E. Marks
<PAGE> 1
EXHIBIT 3.7
VFINANCE.COM, INC.
WRITTEN CONSENT TO ACTION IN LIEU
OF MEETING OF THE BOARD OF DIRECTORS
Pursuant to Section 141(f) of the General Corporation Law of the State
of Delaware, the undersigned, constituting all of the members of the Board of
Directors of vFinance.com, Inc., a Delaware corporation (the "Corporation"), do
hereby waive any notice of, and dispense with the holding of, a meeting of the
Board of Directors, and do hereby consent to the adoption of, and do hereby
adopt, the following resolutions:
WHEREAS, on January 24, 1994, the Corporation's board of directors
amended Section 3.2 of the bylaws of the Corporation, changing the minimum
authorized number of directors on the Corporation's board of directors; and
WHEREAS, in connection with such amendment to the bylaws, Section 3.4
of the bylaws should have been amended to be consistent with the change in the
number of directors set forth in the amended Section 3.2; and
WHEREAS, the board of directors inadvertently failed to amend Section
3.4 of the bylaws to correspond with the amendment to Section 3.2 of the bylaws.
NOW, THEREFORE, it is:
RESOLVED, that the first sentence of Section 3.4 of the bylaws is
hereby deleted in its entirety and replaced with the following:
"3.4 Quorum. At any meeting of the Board of Directors, a
quorum shall be a majority of the number of serving
directors."
FURTHER RESOLVED, that all actions heretofore or hereafter taken and
expenses incurred by any officer or director in furtherance of any of the
actions authorized by the foregoing resolutions are hereby expressly ratified,
confirmed, adopted and approved as acts and deeds of the Corporation; and
FURTHER RESOLVED, that the officers of the Corporation be, and each of
them hereby is, in all respects authorized, empowered and directed to take or
cause to be taken such further action, and to execute and deliver, or cause to
be executed and delivered, in the name and on behalf of the Corporation all such
further agreements, certificates, instruments and documents as they may deem to
be necessary, appropriate or desirable in order to effect the purposes and
intent of the foregoing resolutions and to be in the best interest of the
Corporation (as conclusively evidenced by the taking of such action or the
execution and delivery of such agreements, certificates, instruments and
documents, as the case may be), and that all actions heretofore taken by the
officers of the Corporation in connection with the subject of the foregoing
resolutions be,
<PAGE> 2
and they hereby are, in all respects approved, adopted, ratified and confirmed
as acts and deeds of the Corporation.
This action by Unanimous Written Consent may be executed in two or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same document.
IN WITNESS WHEREOF, the undersigned, constituting all of the members of
the Board of Directors of the Corporation, have executed this written consent to
action to be effective as of January 24, 1994.
/s/ Leonard J. Sokolow /s/ Timothy Mahoney
- -------------------------- --------------------------
Leonard J. Sokolow Timothy Mahoney
<PAGE> 1
Exhibit 10.1
CONSULTING AGREEMENT
THIS CONSULTING AGREEMENT (the "Agreement") is made and entered into
this 29th day of January 2000 by and between Stock Exposure, Inc. whose business
address is at 1127 Foothill Blvd Suite 208, San Luis Obispo, California 93401
(the "Company"), and Vfinance, "VFIN"(the "Client").
In consideration of the mutual promise contained herein and on the
terms and conditions hereinafter set forth, the Company and Client agree as
follows:
1. CONSULTING SERVICES. The Client hereby retains the Company to assist in
profiling a publicly traded company on the Internet website owned and
operated by the Company (http://www.majorprofit.com) as well as
representing the Client as a new addition to an online investor
relations service owned and operated by the Company
(http://www.stockir.com), and the Company hereby accepts and agrees to
such retention. The Company hereby agrees to post publicly summarized
information of the Client as both a profile in the featured "Profile of
the Month" section of Major Profit and as an IR agent for the Client.
It is further acknowledged that the entire objective of the service
performed by the Company is to gain exposure of a public company on
behalf of the Client through internet website, and not to artificially
inflate share prices, trading volume or any other prohibited activity.
2. DURATION OF SERVICE. The Company shall post information regarding the
Client on Major Profit for a time period approximate to 30 days. The
Company also has the discretion to disseminate periodic informative
updates on behalf of the Client for 3-6 months after the initial
advertising launching. In addition, the Company shall post information
regarding the Client on StockIR for a time period of 3 months to
fulfill obligations contained herein this agreement.
3. ACTIVITIES NOT WITHIN THIS AGREEMENT. It is acknowledged and agreed by
the Client that the Company is not rendering legal advice or performing
accounting services. It is also acknowledged that the Company is not
acting in place of an investment advisor or broker-dealer within the
meaning of applicable state and federal securities laws.
4. TERM OF AGREEMENT. The term of this Agreement shall commence on the
initial advertising date and shall terminate 6 months after service
begins on StockIR. Full compensation payments are expected to be
transferred to the Company no later than 60 days after initial coverage
begins.
<PAGE> 2
5. COMPENSATION. In full consideration of the services contained within
this Agreement the Client agrees to compensate the Company ten thousand
shares of one-year 144 restricted VFIN stock.
6. EXPENSES. The Company shall be solely responsible for all expenses and
disbursements anticipated to be made in connection with its performance
under this Agreement.
7. CLIENT REPRESENTATIONS. The Client hereby represents that all
documents, news and other information produced or distributed by the
Client, used in conjunction with a profile on the website of the
Company, or any person or entity acting on behalf of the Client, has
been factual, complete and truthful. Further the Client represents that
neither it, nor any person or entity acting on its behalf, has
knowingly, negligently or recklessly distributed or produced
information relating to the profile company that has violates any
local, state or federal law or statue. Further, the Client represents
that in the future all information provided by the Client, or any
person or entity acting on its behalf, will be factual, complete and
truthful, and neither the Client, or any person or entity acting on its
behalf, will knowingly, negligently or recklessly violate any local,
state or federal law or statue.
In the event that the Client violates the above representations then
the Company, at its option, shall have the right to cease performing
services herein this Agreement. If said circumstances were to arrive
the Company would not be obligated to return any portion of the
compensation package required from signed Agreement.
8. DISCLAIMER OF RESPONSIBILITY FOR ACTS OF THE CLIENT. The obligations of
the Company in this Agreement consist solely of the distribution of
information on its website. In no event shall the Company be required
by this Agreement to represent or make management decisions for the
Client or the profiled company. All final decisions with respect to
acts and omissions of the Client or any affiliates and subsidiaries,
shall be those of the Client or its affiliates, and the Company shall
under no circumstances be liable for any expenses incurred or loss
suffered by the Client as a consequence of such acts or omissions.
A Client representative will provide the Consultant with factual news
on the company to be profiled. Any news given by the Client that is
deemed not true by ANY regulatory body is the SOLE responsibility of
the Client or profiled company, and the Company is in no way liable for
any misrepresentations. Further, the Client is aware that the Company
is relying on the truthfulness and accuracy of said news and
information. Client will reimburse the Company for any and all sums
expended in legal defense or judgements rendered against Company as a
result of misrepresentation to the Company by the Client. As well, the
Company agrees not to misrepresent the profiled company to the best of
its ability.
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<PAGE> 3
The Company will make every effort to fully disclose compensation, and
potential conflicts of interest to the public, in accordance with the
Securities Act of 1933, section 17 (b). The Company will fully disclose
its compensation and insist that all other related parties do the same.
9. INDEMNITY BY THE CLIENT. The Client shall protect, defend, indemnify
and hold the Company and its assigns and attorneys, accountants,
employees, officers and directors harmless from and against all losses,
liabilities, damages, judgements, claims, counterclaims, demands,
actions, proceedings, costs and expenses of every kind and character
resulting from or relating to (a) the inaccuracy, non-fulfillment or
breach of any representation, warranty, covenant or agreement made by
the Client herein; or (b) any legal action, including any counterclaim,
to the extent it is based upon alleged facts that have been determined
by a court of law in a non-appealable final determination to be true,
would constitute a breach of any representation, warranty, covenant or
agreement made by the Client herein; or (c) negligent actions or
omissions of the Client or any employee or agent of the Client, or any
reckless or willful misconduct, occurring during the term hereof with
respect to any of the decisions made by the Client. Any damages or
liability of Client to the Company including payment of attorneys fees
and cost described in section l4 shall be limited to the value of the
compensation paid by Client to the Company hereunder as of the date of
this Agreement.
10. NOTICES. Any notices required or permitted to be given under this
Agreement shall be sufficient if in writing and delivered or sent by
registered or certified mail or overnight courier to the principal
office of each party.
11. APPLICABLE LAW. It is the intention of the parties hereto that this
Agreement and the performance hereunder and all suits and special
proceedings hereunder be construed in accordance with and under and
pursuant to the laws of the State of Florida and that any action,
special proceeding or other proceedings that may be brought arising out
of in connections with or by reason of this Agreement, shall be brought
only in a court of competent jurisdiction within the State of Florida.
12. SEVERABILITY. All agreements and covenants contained herein are
severable, and in the event any of them shall be held to be invalid by
any competent court, the Agreement shall be severed at the option of
either party.
13. ENTIRE AGREEMENT. This Agreement constitutes and embodies the entire
understanding and agreement of the parties and supersedes and replaces
all prior understandings, agreements and negotiations between the
parties.
14. ATTORNEY'S FEES AND COSTS. In the event of any dispute arising out of
the subject matter of this Agreement the prevailing party shall
recover, in addition to any damages
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<PAGE> 4
assessed, its attorneys fees and court costs incurred in litigating or
otherwise settling or resolving such dispute.
15. COUNTERPARTS AND FACSIMILE SIGNATURES. This Agreement may be executed
simultaneously in two or more counterparts, each of which shall be
deemed an original, but all of which taken together shall constitute
one and the same instrument. Execution and delivery of this Agreement
by exchange of facsimile copies bearing the facsimile signature of a
party hereto shall constitute a valid and binding execution and
delivery of this Agreement by such party. Such facsimile copies shall
constitute enforceable original documents.
VFinance.com STOCK EXPOSURE INC.
Leonard J. Sokolow Weston Lemos, CEO
- ------------------------------------ ------------------------------------
Printed Name, Title Printed Name, Title
/s/ Leonard J. Sokolow /s/ Weston Lemos
- ------------------------------------ ------------------------------------
Signature Date Signature Date
4
<PAGE> 1
Exhibit 10.2
INVESTOR RELATIONS/CONSULTING AGREEMENT BETWEEN
PEACHTREE FIBEROPTICS, INC.
AND
EQUIS CAPITAL CORP.
This agreement is made and entered into as of this 1st day of December 1999 by
and between Peachtree FiberOptics, Inc. d/b/a vfinance.com with offices at 3300
PGA Boulevard, Suite 810 Palm Beach Gardens, Florida 33410 (hereinafter referred
to as the "Company") and EQUIS Capital Corp. with offices at 321 NW 36th Avenue
Deerfield Beach, FL 33442 (hereinafter referred to as "EQUIS"). Further, it is
understood that this Agreement supersedes all preceding written or verbal
Agreements between the parties.
WITNESSETH
WHEREAS, the Company requires financial public relations services and desires to
engage EQUIS to provide such services; and
WHEREAS, EQUIS is agreeable to such engagement on the terms set forth herein;
and
WHEREAS, the parties mutually desire to enter into this Consulting Agreement,
NOW, THEREFORE, in consideration of the mutual promise and covenants contained
herein, the parties have agreed as follows:
1. APPOINTMENT
The Company hereby appoints EQUIS as its financial public relations advisor and
retains and engages EQUIS under the terms and conditions of this Agreement.
2. TERM
The term of this Agreement shall be for a period of six months (the "initial
Term") and shall be renewed for additional six-month terms (the "Renewal
Terms"), upon the mutual written agreement of the Company and EQUIS prior to the
end of the Initial Term or any Renewal Terms.
3. OBLIGATIONS OF EQUIS
EQUIS agrees to do or perform the following services through its principal, Gary
Gordon who shall provide a minimum of 20 hours per week of his time:
(a) Coordinate corporate financial public relations efforts.
(b) Seek to make the Company, its management, its products and
prospects, known to broker-dealers, institutional investors,
research analysts, fund managers, investment advisors, and
other members of the financial community as well as the
financial media.
------- -------
LJS GJG
1
<PAGE> 2
(c) Arrange and manage company presentations through conference
calls, personal interface and other means of direct
presentations to audiences, which may include stockbrokers,
individual and institutional investors, money managers,
analysts, etc.
(d) EQUIS will provide introduction to its network of individuals,
firms and brokers for the purpose of participating in
scheduled meetings or conference calls with the Company.
(e) EQUIS will be available to the company to field any calls from
and arrange to provide written information to individuals,
firms and brokers inquiring about the Company.
(f) EQUIS will use its best efforts to obtain for the Company
exposure in various financial media, independent financial
newsletters and through on-line fax and Internet/Email
broadcast services.
(g) The direct costs related to any of the services outlined in
this Agreement (if any) will be either directly invoiced to
the Company or billed by EQUIS to the Company at cost. The
Company agrees to promptly reimburse EQUIS for any such costs
it outlays within 10 days of invoice. The Company's CEO must
approve in advance any services that require additional costs.
4. LIMITATIONS ON SERVICES
The parties recognize that certain responsibilities and obligations are imposed
by Federal and State securities laws and by the applicable rules and regulations
of stock exchanges, the National Association of Securities Dealers Inc. and the
compliance rules of brokerage houses and other sources.
Accordingly, EQUIS agrees:
(a) EQUIS shall not release any financial or other material
information or data about the Company without the consent and
approval of the Company.
(b) EQUIS shall not conduct any meetings with financial analysts
without informing the Company in advance of the proposed
meeting and the format or agenda of such meeting.
(c) EQUIS shall not release any information or data about the
Company to any selected or limited person(s), entity or groups
if EQUIS is aware that such information or data has not been
generally released or promulgated.
- ------- -------
LJS GJG
2
<PAGE> 3
5. DUTIES OF THE COMPANY
In recognition of the responsibilities set forth in the preceding paragraph 4,
the Company agrees:
(a) Within five (5) days of the date of execution of this
Agreement, to deliver to EQUIS a complete due diligence
package on the Company including all the Company's filings
with the Securities and Exchange Commission, all press
releases written about the Company and all other relevant
materials with respect to such filings, including but not
limited to corporate reports, brochures and the like, the
Company's business plan, all financial statements, audited
and/or otherwise and/or pro forma, a list of the of all the
Company's shareholders and a list of the brokers and market
makers in the Company's stock.
(b) To supply EQUIS on a regular and timely basis with all
approved data and information about the Company, its
management, its products and its operations. The Company shall
be responsible for advising EQUIS of any facts, which would
affect the accuracy of any prior data and information supplied
to EQUIS. The Company shall supply EQUIS with a list of new
shareholders of the Company's stock on a monthly basis.
(c) To promptly supply EQUIS with full and complete files of all
shareholder reports and communications with all data and
information supplied to any analyst, broker-dealer, market
maker or other member of the financial community and with all
product/services brochures, sales materials, etc.
(d) To promptly notify EQUIS of the filing of any registration
statement for the sale of securities and of any other event
which triggers any restrictions on publicity.
(e) To notify EQUIS if any information or data supplied to EQUIS
has not been generally release or promulgated.
6. REPRESENTATIONS AND IMDEMNIFICATION
(a) The Company shall be deemed to make a continuing
representation of the accuracy and currency of any and all
material facts, material information and data which it
supplies to EQUIS and the Company acknowledges its awareness
that EQUIS will rely on such continuing representation in
disseminating such information and otherwise performing its
public relations functions.
(b) The Company shall immediately give written notice to EQUIS of
any change in the Company's financial condition or in the
nature of its business or operations which had or might have
an adverse material effect on its operations, assets,
properties or prospects of its business. EQUIS, in the absence
of notice in writing from the Company, will rely on the
continuing accuracy of material information and data supplied
by the Company.
- ------- -------
LJS GJG
3
<PAGE> 4
(c) The Company hereby agrees to indemnify and to hold EQUIS
harmless from and against any claims demands, suits, losses
and damages including claims for attorney's fees and court
costs, arising out of EQUIS' reliance upon the accuracy and
continuing accuracy of such facts, materials, information and
data and on the general availability of information supplied
to EQUIS by the Company and EQUIS' ability to promulgate such
information.
(d) EQUIS MAKES NO REPRESENTATION THAT (A) ITS SERVICE WILL RESULT
IN ANY ENHANCEMENT TO THE COMPANY (B) THE PRICE OF THE
COMPANY'S PUBLICLY TRADED SECURITIES WILL INCREASE, OR (C) ANY
PERSON WILL PURCHASE SECURITIES IN THE COMPANY.
7. COMPENSATION
(a) For all general financial public relations services, the
Company shall pay to EQUIS a monthly fee of $3,000.00. (See
section 9a)
(b) In addition to the monthly fee set forth in paragraphs 7(a)
above, the Company shall deliver to EQUIS an option agreement
to purchase 30,000 shares of the Company's common stock.
Beginning one month from the date of this Agreement, these
options shall vest at the rate of 5,000 per month starting
with the options that have the lowest exercise price. Such
options shall have the following exercise prices:
a) First 10,000 at $4 per share
b) Second 10,000 at $5 per share
c) Third 10,000 at $6 per share
These options shall be exercisable for a period of five years
and the underlying shares shall have registration rights
pursuant to Exhibit A. The agreement evidencing the above
options will be delivered to EQUIS within 30 days of the
signing of this Agreement.
(c) For special services not within the scope of this Agreement,
the Company shall pay EQUIS such fees as, and when the parties
determine in advance, the performance of the services and
fees. All special services will be agreed to in written form
and pre-approved by the Company.
8. TERMINATION
This Agreement may be terminated by either party with or without cause upon 10
days written notice.
- ------- -------
LJS GJG
4
<PAGE> 5
9. BILLING AND PAYMENT
(a) It is agreed that the monthly fee above shall be payable upon
the successful funding of at least $2,000,000 of the Company's
private placement. This $3,000 monthly fee shall be payable
retroactive to the date of this Agreement.
(b) The direct costs related to any of the services outlined above
or in this Agreement (if any) will be either directly invoiced
to the Company or billed by EQUIS to the Company at cost. The
Company agrees to promptly pay all third party vendors under
the terms and conditions of their respective invoices and to
indemnify EQUIS against any claim for payment made by any
third party vendor for services rendered on behalf of the
Company. The Company agrees to promptly reimburse EQUIS for
any expenses incurred by EQUIS on behalf of the Company within
10 days of invoice. Expenses are to be approved in advance by
the Company.
10. RELATIONSHIP OF PARTIES
EQUIS is an independent contractor and is responsible for compensation of its
own agents, employees and representatives as well as all applicable withholding
therefrom and taxes thereon. This Agreement does not establish any partnership,
joint venture or other business entity or association between the parties.
11. ATTORNEY'S FEES
Should either party default in the terms or conditions of this Agreement and
suit be filed as a result of such default, the prevailing party shall be
entitled to recover all costs incurred as a result of such default including all
costs and reasonable attorney fees through trial and appeal.
12. ASSIGNMENT
The rights and obligations of the parties under this Agreement shall inure to
the benefit of and shall be binding upon the successors and assigns of the
parties.
13. NOTICES
Any notice required or permitted to be given under this Agreement shall be
sufficient if in writing and if sent by certified mail, return receipt requested
or Federal Express to the principal officer of the party being notified.
14. SEPERABILITY
If one or more of the provisions of this Agreement shall be held invalid,
illegal or unenforceable in any respect, such provision to the extent invalid,
illegal or unenforceable and provided that such provision is not essential to
the transaction provided for by this Agreement, shall not affect any other
provision hereof and the Agreement shall be construed as if such provision had
never been contained herein.
- ------- -------
LJS GJG
5
<PAGE> 6
15. GOVERNING LAW
This Agreement shall be governed by and interpreted under the laws of the State
of Florida.
16. ENTIRE AGREEMENT
This instrument contains the entire agreement between the parties and may be
modified only by agreement in writing and signed by both parties.
IN WITNESS WHEROF, the parties hereto, intending to be legally bound, have
executed this Agreement on this 1st day of December 1999.
EQUIS CAPITAL CORP. PEACHTREE FIBEROPTICS, INC.
/s/ Leonard J. Sokolow
- -------------------------- ------------------------
By: Gary J. Gordon, President Leonard J. Sokolow, CEO
6
<PAGE> 1
EXHIBIT 10.5
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT made as of November 8, 1999 by and between
PEACHTREE FIBEROPTICS, INC., a Delaware corporation (the "Company"), and LEONARD
J. SOKOLOW ("Employee").
WITNESSETH:
WHEREAS, Employee wishes to be employed by the Company with the duties
and responsibilities as hereinafter described, and the Company desires to assure
itself of the availability of Employee's services in such capacity.
NOW, THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the receipt and adequacy of which is hereby
acknowledged, the Company and Employee hereby agree as follows:
1. EMPLOYMENT. The Company hereby agrees to employ Employee, and
Employee hereby agrees to serve the Company, upon the terms and conditions
hereinafter set forth.
2. TERM. The employment of Employee by the Company pursuant to
this Agreement shall be for a three (3) year period commencing on the date
hereof and shall automatically be extended for an additional one year period on
the first year anniversary date of this Agreement (November 8, 2000) and each
anniversary date thereafter (November 8th of each year beginning in 2001) unless
the Company's has provided notice of non-renewal thirty (30) days prior an
anniversary date as directed by a majority vote of the Board of Directors (the
"Term"). For example, in the event the Company has provided notice of
non-renewal 30 days prior to November 8, 2000, there will be only two (2) years
remaining in the Term; in the event the Company did not provide such notice
thirty (30) days prior to November 8, 2000, then the Term shall be extended to
November 8, 2003 so that on November 8, 2000 the total Term is three (3) years;
in no event following such notice by the Company will the remaining Term be less
than two (2) years.
3. DUTIES. Employee shall, subject to overall direction
consistent with the legal authority of the Board of Directors of the Company
(the "Board"), serve as, and have all power and authority inherent in the
offices of Vice Chairman and Chief Executive Officer of the Company and shall be
responsible for those areas in the conduct of the business reasonably assigned
to him by the Board. Employee shall devote substantially all his business time
and efforts to the business of the Company; provided, however, that it is
understood and agreed that, while Employee may devote time to other business
matters in which he has an interest, in the event of a conflict, Employee's
first and primary responsibility shall be to the performance of his duties for
the Company.
4. COMPENSATION AND OTHER PROVISIONS. Employee shall be entitled
to the compensation and benefits hereinafter described in subparagraphs (a)
through (e) (such compensation and benefits being hereinafter referred to as
"Compensation Benefits").
<PAGE> 2
(a) BASE SALARY. The Company shall pay to Employee an
initial base salary of $150,000 per annum for the first year of this Agreement
and shall increase five percent (5%) per annum beginning one year from the date
of this Agreement and each year thereafter ("Base Salary"). The Base Salary and
Employee's other compensation will be reviewed by the Board at least annually
and may be increased (but not decreased) from time to time as the Board may
determine.
(b) PARTICIPATION IN BENEFIT PLANS. During the Service
Period, Employee shall be eligible to participate in all employee benefit plans
and arrangements now in effect or which may hereafter be established, including,
without limitation, all life, group insurance and medical care plans and all
disability, retirement and other employee benefit plans of the Company.
(c) OTHER PROVISIONS. Employee shall be entitled to four
(4) weeks paid vacation per annum and shall receive an automobile allowance of
not less than $1,000 per month. Employee shall be reimbursed for all reasonable
expenses incurred by him in the performance of his duties, including, but not
limited to, cellular telephone, entertainment, travel and other expenses deemed
reasonably necessary by Employee in his sole and absolute discretion.
(d) DISCRETIONARY BONUSES. Employee shall be entitled to
receive annual and/or interim cash bonuses and/or other bonuses when and in such
amounts as may be determined by the Board in its sole and reasonable discretion
based upon Employee's performance, the Company's performance and/or other
factors; provided, that, the Board shall meet at least annually to review
Employee's bonus entitlements.
(e) INCENTIVE COMPENSATION. Employee shall receive
monthly payments equal to that percentage of the Available Cash (defined in
Schedule A) of each applicable operating unit, division and subsidiary of the
Company, as more fully described on Schedule A attached hereto. Notwithstanding
the foregoing, subject to the mutual written agreement of Employee and the
Company, Employee may receive lesser percentages of Available Cash with respect
to one or more specified operating divisions, units or subsidiaries, as the case
may be, for specified periods of time to be mutually agreed between Employee and
the Company.
(f) STOCK OPTIONS. In the event the Company has not put
in place by June 1, 2000 the special Class B of voting common stock as described
in the Share Exchange Agreement entered into as of November 8, 1999 or the
Employee has otherwise waived in writing his rights to receive such special
Class B of voting common stock and thus elect to retain the current class of
common stock Employee beneficially owns and received pursuant to such Share
Exchange Agreement, upon the earlier of June 1, 2000 or the date of such waiver,
the Company and Employee agree to enter into the Stock Option Agreement attached
hereto as Exhibit B pursuant to which the Company shall grant to Employee
certain options to purchase common stock of the Company upon such terms and
conditions set forth therein
5. SEVERANCE AND CHANGE OF CONTROL PROVISIONS. Upon the
occurrence of a Triggering Event (as hereinafter defined), Employee shall be
entitled to the immediate receipt of Severance Payments and Benefits (as
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<PAGE> 3
hereinafter defined) from the Company in accordance with the terms hereinafter
set forth:
(a) TRIGGERING EVENT. The occurrence of any of the
following events shall be defined as a "Triggering Event" for purposes hereof:
(1) The involuntary termination of Employee's
employment (other than for Cause (as hereinafter defined)) at any time prior to
the expiration of the Term or within two (2) years following a Change of Control
(as hereinafter defined);
(2) The voluntary resignation of Employee for
any reason whatsoever within ninety (90) days following a Change of Control; or
(3) The voluntary resignation of Employee for
"good reason," which for purposes hereof shall include, without limitation, (i)
a demotion, (ii) a reduction in salary, benefits, bonuses, incentives or
perquisites, (iii) the relocation of the principal office of the Company or the
relocation of Employee outside of the Dade, Broward or Palm Beach Counties in
Florida, or (iv) a material increase in business travel.
(4) The death or Disability of the Employee (as
defined herein).
(b) CHANGE OF CONTROL. For purposes of this Agreement,
the term "Change of Control" shall mean the occurrence of any of the following
events:
(1) Thirty percent (30%) or more of the
Company's voting stock shall be acquired by any person (other than Employee),
entity or affiliated group;
(2) An unapproved change to the majority control
of the Company's board of directors;
(3) Any merger, consolidation or business
combination pursuant to which the Company is not the surviving corporation or
thirty percent (30%) or more of the Company's voting stock shall be owned or
controlled by any person (other than Employee), entity or affiliated group;
(4) A liquidation or dissolution of the Company;
or
(5) The sale of all or substantially all of the
Company's assets.
(c) SEVERANCE PAYMENTS AND BENEFITS. For purposes of this
Agreement, the term "Severance Payments and Benefits" shall mean:
(1) Employee shall receive a lump sum payment
equal to: two (2) multiplied by the sum of Employee's highest annual Base Salary
plus the highest bonus, incentive and other compensation payments received by
Employee in respect of any year within the three (3) year period preceding the
Triggering Event (or the annualized sum of Employee's Base Salary plus the
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<PAGE> 4
maximum amount of bonuses and incentives which Employee could have been entitled
during the year in which the Triggering Event occurred);
(2) All stock options, warrants, other stock
appreciation rights and other similar securities shall become immediately and
fully vested and all conditions applicable to all contingently issued options,
warrants, stock appreciation rights and other similar securities shall be deemed
waived by the Company;
(3) All benefits applicable to Employee and his
family members as described in Sections 5(a) and (b) of the Agreement shall
continue for a period of two (2) years following the Triggering Event or through
the expiration of the Term (as if the Triggering Event had not occurred),
whichever is later;
(4) In the event that Severance Payments and
Benefits are deemed to be "excess parachute payments" as defined under Section
280G of the Internal Revenue Code, then the Company shall pay to Employee an
additional lump sum cash payment as shall be necessary to provide Employee with
the same "after-tax" compensation and benefits as if no such excise tax had been
imposed.
(5) The Company shall pay as and when due any
and all attorneys' fees and costs that Employee may incur in connection with the
enforcement of his rights under this Agreement or any dispute or settlement in
connection herewith;
(6) Severance Payments and Benefits will not be
subject to mitigation in any respect; and
(7) The non-competition and non-solicitation
periods described in Section 13 of this Agreement shall be reduced from one (1)
year to three (3) months (other than by virtue of the expiration of the Term of
this Agreement).
(d) STOCK OPTIONS, WARRANTS AND STOCK APPRECIATION
RIGHTS. Notwithstanding the foregoing, all stock options, warrants, stock
appreciation rights and other other similar securities shall immediately vest
upon the occurrence of a Change of Control and at such time all conditions
applicable to contingently issued options, warrants, stock appreciation rights
and other securities shall be deemed waived by the Company.
6. TERMINATION. Employee's employment hereunder shall terminate
as a result of any of the following events:
(a) Employee's death;
(b) Employee shall be unable to perform his duties
hereunder by reason of illness, accident or other physical or mental disability
for a continuous period of at least nine months or an aggregate of twelve months
during any continuous eighteen month period ("Disability");
(c) voluntary termination by Employee; or
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<PAGE> 5
(d) for Cause, where "Cause" shall mean: (i) final
non-appealable adjudication of Employee of a felony; or (ii) the reasonable
determination of eighty (80%) percent of the entire Board (other than Employee)
that Employee has engaged in material intentional misconduct or the gross
neglect of his duties, which has a continuing material adverse effect on the
business of the Company.
Any termination pursuant to subparagraph (b), (c) or (d) of
this Section shall be communicated by a written notice ("Notice of
Termination"), such notice to set forth with specificity the grounds for
termination if the result of "Cause". Employee's employment under this Agreement
shall be deemed to have terminated as follows: (i) if Employee's employment is
terminated pursuant to subparagraph (a) above, on the date of his death; (ii) if
Employee's employment is terminated pursuant to subparagraph (b) or (d) above,
on the date on which Notice of Termination is given; and (iii) if Employee's
employment is terminated pursuant to subparagraph (c) above, thirty (30) days
after the date on which a Notice of Termination is given. The date on which
termination is deemed to have occurred pursuant to this paragraph is hereinafter
referred to as the "Date of Termination".
7. PAYMENTS ON TERMINATION. In the event that Employee's
employment is terminated pursuant to Section 6 above, the Company shall pay to
Employee his full Base Salary through the Date of Termination together with all
incentive compensation, benefits and other compensation, if any, due and owing
as of that date, plus any Severance and Benefit Payments to which Employee may
be entitled hereunder.
8. BOARD OF DIRECTORS. The Company shall use its best efforts to
cause Employee to be elected as a member of the Board of Directors of the
Company and each of its subsidiaries at all times during the Term. Employee
shall agree to faithfully serve the Company as a member of all such Boards upon
election.
9. LIFE INSURANCE. If requested by the Company, Employee shall
submit to such physical examinations and otherwise take such actions and execute
and deliver such documents as may be reasonably necessary to enable the Company
to obtain life insurance on the life of Employee for the benefit of the Company.
10. REPRESENTATIONS AND WARRANTIES. Employee represents and
warrants to the Company that he is under no contractual or other restriction or
obligation that would prevent the performance of his duties hereunder or
interfere with the rights of the Company hereunder.
11. DISCLOSURE AND PROTECTION OF CONFIDENTIAL INFORMATION.
(a) For purposes of this Agreement, "Confidential
Information" means knowledge, information and material which is proprietary to
the Company, of which Employee may obtain knowledge or access through or as a
result of his employment by the Company (including information conceived,
originated, discovered or developed in whole or in part by Employee).
Confidential Information includes, but is not limited to, (i) technical
knowledge, information and material such as trade secrets, processes, formulas,
data, know-how, improvements, inventions, computer programs, drawings, patents,
and experimental and development work techniques, and (ii) marketing and other
5
<PAGE> 6
information, such as supplier lists, customer lists, marketing and business
plans, business or technical needs of customers, consultants, licensees or
suppliers and their methods of doing business, arrangements with customers,
consultants, licensees or suppliers, manuals and personnel records or data.
Confidential Information also includes any information described above which the
Company obtains from another party and which the Company treats as proprietary
or designates as confidential, whether or not owned or developed by the Company.
Notwithstanding the foregoing, any information which is or becomes available to
the general public otherwise than by breach of this Section 11 shall not
constitute Confidential Information for purposes of this Agreement.
(b) During the term of this Agreement and thereafter,
Employee agrees, to hold in confidence all Confidential Information and not to
use such information for Employee's own benefit or to reveal, report, publish,
disclose or transfer, directly or indirectly, any Confidential Information to
any person or entity, or to utilize any Confidential Information for any
purpose, except in the course of Employee's work for the Company.
(c) Employee will abide by any and all security rules and
regulations, whether formal or informal, that may from time to time be imposed
by the Company for the protection of Confidential Information, and will inform
the Company of any defects in, or improvements that could be made to, such rules
and regulations.
(d) Employee will notify the Company in writing
immediately upon receipt of any subpoena, notice to produce, or other compulsory
order or process of any court of law or government agency if such document
requires or may require disclosure or other transfer of Confidential
Information.
(e) Upon termination of employment, Employee will deliver
to the Company any and all records and tangible property that contain
Confidential Information that are in his possession or under his control.
12. COVENANT NOT TO COMPETE.
(a) In consideration for the Company entering into this
Agreement, Employee covenants and agrees that during the Term and for a one (1)
year period thereafter, Employee will not, without the express prior written
consent of the Company, directly or indirectly, compete with the business of the
Company anywhere within the United States of America. Employee will undertake no
activities that may lead Employee to compete with or to acquire rival,
conflicting or antagonistic interests to those of the Company with respect to
the business of the Company, whether alone, as a partner, or as an officer,
director, employee, independent contractor, consultant or shareholder holding 5%
or more of the outstanding voting stock of any other corporation, or as a
trustee, fiduciary or other representative of any other person or entity.
(b) During the Service Period and for a period of one (1)
year after termination of employment, Employee will not, directly or indirectly,
solicit or induce any other employee of the Company or any parent or affiliate
to leave his or her employment, or solicit or induce any consultant or
independent contractor to sever that person's relationship with the Company.
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<PAGE> 7
(c) If any court shall determine that the duration or
geographical limit of any covenant contained in this Section 12 is
unenforceable, it is the intention of the parties that covenant shall not
thereby be terminated but shall be deemed amended to the extent required to
render it valid and enforceable, such amendment to apply only in the
jurisdiction of the court that has made such adjudication.
(d) Employee acknowledges and agrees that the covenants
contained in Sections 11 and 12 hereof are of the essence in this Agreement,
that each of such covenants is reasonable and necessary to protect and preserve
the interests, properties, and business of the Company, and that irreparable
loss and damage will be suffered by the Company should Employee breach any of
such covenants. Employee further represents and acknowledges that he shall not
be precluded from gainful engagement in a satisfactory fashion by the
enforcement of these provisions.
13. AVAILABILITY OF INJUNCTIVE RELIEF. Employee acknowledges and
agrees that any breach by him of the provisions of Sections 11 or 12 hereof will
cause the Company irreparable injury and damage for which it cannot be
adequately compensated in damages. Employee therefore expressly agrees that the
Company shall be entitled to seek injunctive and/or other equitable relief, on a
temporary or permanent basis to prevent any anticipatory or continuing breach of
this Agreement or any part hereof, and is secured as an enforcement. Nothing
herein shall be construed as a waiver by the Company of any right it may have or
hereafter acquired to monetary damages by reason of any injury to its property,
business or reputation or otherwise arising out of any wrongful act or omission
of it.
14. SURVIVAL. The covenants, agreements, representations and
warranties contained in or made pursuant to this Agreement shall survive
Employee's termination of employment, irrespective of any investigation made by
or on behalf of any party.
15. MODIFICATION. This Agreement sets forth the entire
understanding of the parties with respect to the subject matter hereof,
supersedes all existing agreements between them concerning such subject matter,
and may be modified only by a written instrument duly executed by each party.
16. NOTICES. Any notice required or permitted hereunder shall be
deemed validly given if delivered by hand, verified overnight delivery, or by
first class, certified mail to the following addresses (or to such other address
as the addressee shall notify in writing to the other party):
If to Employee: Leonard J. Sokolow
2458 Provence Court
Weston, Florida 33327
If to the Company: Peachtree Fiberoptics, Inc.
3300 PGA Blvd., Suite 810
Palm Beach Gardens, Florida 33410
Attention: President
7
<PAGE> 8
with a copy to: Richard N. Bernstein, Esq.
Cohen, Berke, Bernstein,
Brodie & Kondell, P.A.
2601 South Bayshore Drive, 19th Floor
Miami, Florida 33133
17. WAIVER. Any waiver by either party of a breach of any
provision of this Agreement shall not operate as or be construed to be a waiver
of any other breach of such provision or of any breach of any other provision of
this Agreement. The failure of a party to insist upon strict adherence to any
term of this Agreement on one or more occasions shall not be considered a waiver
or deprive that party of the right thereafter to insist upon strict adherence to
that term or any other term of this Agreement. All waivers must be in writing.
18. BINDING EFFECT. the Company's rights and obligations under
this Agreement shall not be transferable by assignment or otherwise, and any
attempt to do any of the foregoing shall be void. The provisions of this
Agreement shall be binding upon the Employee and his heirs and personal
representatives, and shall be binding upon and inure to the benefit of the
Company, its successors and assigns.
19. HEADINGS. The headings in this Agreement are solely for
convenience of reference and shall be given no effect in the construction or
interpretation of this Agreement.
20. GOVERNING LAW; VENUE. This Agreement is to be performed in the
State of Florida, and the validity, construction and enforcement of, and the
remedies under, this Agreement shall be governed in accordance with the laws of
the State of Florida, without giving effect to any choice of laws principles. In
the event of any litigation arising out of or relating to this Agreement,
exclusive venue shall be in Broward County, Florida.
21. ENTIRE AGREEMENT. This writing constitutes the binding and
entire agreement of the parties superseding and extinguishing all prior
agreements or understandings regarding the subject matter hereof, and may not be
modified without the written agreement by the parties.
22. INVALIDITY. The invalidity or unenforceability of any term of
this Agreement shall not invalidate, make unenforceable or otherwise affect any
other term of this Agreement, which shall remain in full force and effect.
23. ATTORNEYS' FEES. In the event any dispute or litigation arises
hereunder between any of the parties hereto, the prevailing party shall be
entitled to all reasonable costs and expenses incurred by it in connection
therewith (including, without limitation, all reasonable attorneys' fees and
costs incurred before and at any trial or other proceeding and at all tribunal
levels), as well as all other relief granted in any suit or other proceeding.
8
<PAGE> 9
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first hereinabove written.
EMPLOYER:
PEACHTREE FIBEROPTICS, INC., a Delaware
corporation
By: /s/ SIDNEY LEVINE
-------------------------------------
Sidney Levine
Title: Director
EMPLOYEE:
/s/ LEONARD J. SOKOLOW
----------------------------------------
Leonard J. Sokolow
9
<PAGE> 1
EXHIBIT 10.6
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT made as of November 8, 1999 by and between
PEACHTREE FIBEROPTICS, INC., a Delaware corporation (the "Company"), and TIMOTHY
E. MAHONEY ("Employee").
WITNESSETH:
WHEREAS, Employee wishes to be employed by the Company with the duties
and responsibilities as hereinafter described, and the Company desires to assure
itself of the availability of Employee's services in such capacity.
NOW, THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the receipt and adequacy of which is hereby
acknowledged, the Company and Employee hereby agree as follows:
1. EMPLOYMENT. The Company hereby agrees to employ Employee, and
Employee hereby agrees to serve the Company, upon the terms and conditions
hereinafter set forth.
2. TERM. The employment of Employee by the Company pursuant to
this Agreement shall be for a three (3) year period commencing on the date
hereof and shall automatically be extended for an additional one year period on
the first year anniversary date of this Agreement (November 8, 2000) and each
anniversary date thereafter (November 8th of each year beginning in 2001) unless
the Company's has provided notice of non-renewal thirty (30) days prior an
anniversary date as directed by a majority vote of the Board of Directors (the
"Term"). For example, in the event the Company has provided notice of
non-renewal 30 days prior to November 8, 2000, there will be only two (2) years
remaining in the Term; in the event the Company did not provide such notice
thirty (30) days prior to November 8, 2000, then the Term shall be extended to
November 8, 2003 so that on November 8, 2000 the total Term is three (3) years;
in no event following such notice by the Company will the remaining Term be less
than two (2) years.
3. DUTIES. Employee shall, subject to overall direction
consistent with the legal authority of the Board of Directors of the Company
(the "Board"), serve as, and have all power and authority inherent in the
offices of Chairman and Chief Operating Officer of the Company and shall be
responsible for those areas in the conduct of the business reasonably assigned
to him by the Board. Employee shall devote substantially all his business time
and efforts to the business of the Company; provided, however, that it is
understood and agreed that, while Employee may devote time to other business
matters in which he has an interest, in the event of a conflict, Employee's
first and primary responsibility shall be to the performance of his duties for
the Company.
4. COMPENSATION AND OTHER PROVISIONS. Employee shall be entitled
to the compensation and benefits hereinafter described in subparagraphs (a)
through (e) (such compensation and benefits being hereinafter referred to as
"Compensation Benefits").
<PAGE> 2
(a) BASE SALARY. The Company shall pay to Employee an
initial base salary of $150,000 per annum for the first year of this Agreement
and shall increase five percent (5%) per annum beginning one year from the date
of this Agreement and each year thereafter ("Base Salary"). The Base Salary and
Employee's other compensation will be reviewed by the Board at least annually
and may be increased (but not decreased) from time to time as the Board may
determine.
(b) PARTICIPATION IN BENEFIT PLANS. During the Service
Period, Employee shall be eligible to participate in all employee benefit plans
and arrangements now in effect or which may hereafter be established, including,
without limitation, all life, group insurance and medical care plans and all
disability, retirement and other employee benefit plans of the Company.
(c) OTHER PROVISIONS. Employee shall be entitled to four
(4) weeks paid vacation per annum and shall receive an automobile allowance of
not less than $1,000 per month. Employee shall be reimbursed for all reasonable
expenses incurred by him in the performance of his duties, including, but not
limited to, cellular telephone, entertainment, travel and other expenses deemed
reasonably necessary by Employee in his sole and absolute discretion.
(d) DISCRETIONARY BONUSES. Employee shall be entitled to
receive annual and/or interim cash bonuses and/or other bonuses when and in such
amounts as may be determined by the Board in its sole and reasonable discretion
based upon Employee's performance, the Company's performance and/or other
factors; provided, that, the Board shall meet at least annually to review
Employee's bonus entitlements.
(e) INCENTIVE COMPENSATION. Employee shall receive
monthly payments equal to that percentage of the Available Cash (defined in
Schedule A) of each applicable operating unit, division and subsidiary of the
Company, as more fully described on Schedule A attached hereto. Notwithstanding
the foregoing, subject to the mutual written agreement of Employee and the
Company, Employee may receive lesser percentages of Available Cash with respect
to one or more specified operating divisions, units or subsidiaries, as the case
may be, for specified periods of time to be mutually agreed between Employee and
the Company.
(f) STOCK OPTIONS. In the event the Company has not put
in place by June 1, 2000 the special Class B of voting common stock as described
in the Share Exchange Agreement entered into as of November 8, 1999 or the
Employee has otherwise waived in writing his rights to receive such special
Class B of voting common stock and thus elect to retain the current class of
common stock Employee beneficially owns and received pursuant to such Share
Exchange Agreement, upon the earlier of June 1, 2000 or the date of such waiver,
the Company and Employee agree to enter into the Stock Option Agreement attached
hereto as Exhibit B pursuant to which the Company shall grant to Employee
certain options to purchase common stock of the Company upon such terms and
conditions set forth therein
5. SEVERANCE AND CHANGE OF CONTROL PROVISIONS. Upon the
occurrence of a Triggering Event (as hereinafter defined), Employee shall be
entitled to the immediate receipt of Severance Payments and Benefits (as
hereinafter defined) from the Company in accordance with the terms hereinafter
set forth:
2
<PAGE> 3
(a) TRIGGERING EVENT. The occurrence of any of the
following events shall be defined as a "Triggering Event" for purposes hereof:
(1) The involuntary termination of Employee's
employment (other than for Cause (as hereinafter defined)) at any time prior to
the expiration of the Term or within two (2) years following a Change of Control
(as hereinafter defined);
(2) The voluntary resignation of Employee for
any reason whatsoever within ninety (90) days following a Change of Control; or
(3) The voluntary resignation of Employee for
"good reason," which for purposes hereof shall include, without limitation, (i)
a demotion, (ii) a reduction in salary, benefits, bonuses, incentives or
perquisites, (iii) the relocation of the principal office of the Company or the
relocation of Employee outside of the Dade, Broward or Palm Beach Counties in
Florida, or (iv) a material increase in business travel.
(4) The death or Disability of the Employee (as
defined herein).
(b) CHANGE OF CONTROL. For purposes of this Agreement,
the term "Change of Control" shall mean the occurrence of any of the following
events:
(1) Thirty percent (30%) or more of the
Company's voting stock shall be acquired by any person (other than Employee),
entity or affiliated group;
(2) An unapproved change to the majority control
of the Company's board of directors;
(3) Any merger, consolidation or business
combination pursuant to which the Company is not the surviving corporation or
thirty percent (30%) or more of the Company's voting stock shall be owned or
controlled by any person (other than Employee), entity or affiliated group;
(4) A liquidation or dissolution of the Company;
or
(5) The sale of all or substantially all of the
Company's assets.
(c) SEVERANCE PAYMENTS AND BENEFITS. For purposes of this
Agreement, the term "Severance Payments and Benefits" shall mean:
(1) Employee shall receive a lump sum payment
equal to: two (2) multiplied by the sum of Employee's highest annual Base Salary
plus the highest bonus, incentive and other compensation payments received by
Employee in respect of any year within the three (3) year period preceding the
Triggering Event (or the annualized sum of Employee's Base Salary plus the
maximum amount of bonuses and incentives which Employee could have been entitled
during the year in which the Triggering Event occurred);
3
<PAGE> 4
(2) All stock options, warrants, other stock
appreciation rights and other similar securities shall become immediately and
fully vested and all conditions applicable to all contingently issued options,
warrants, stock appreciation rights and other similar securities shall be deemed
waived by the Company;
(3) All benefits applicable to Employee and his
family members as described in Sections 5(a) and (b) of the Agreement shall
continue for a period of two (2) years following the Triggering Event or through
the expiration of the Term (as if the Triggering Event had not occurred),
whichever is later;
(4) In the event that Severance Payments and
Benefits are deemed to be "excess parachute payments" as defined under Section
280G of the Internal Revenue Code, then the Company shall pay to Employee an
additional lump sum cash payment as shall be necessary to provide Employee with
the same "after-tax" compensation and benefits as if no such excise tax had been
imposed.
(5) The Company shall pay as and when due any
and all attorneys' fees and costs that Employee may incur in connection with the
enforcement of his rights under this Agreement or any dispute or settlement in
connection herewith;
(6) Severance Payments and Benefits will not be
subject to mitigation in any respect; and
(7) The non-competition and non-solicitation
periods described in Section 13 of this Agreement shall be reduced from one (1)
year to three (3) months (other than by virtue of the expiration of the Term of
this Agreement).
(d) STOCK OPTIONS, WARRANTS AND STOCK APPRECIATION
RIGHTS. Notwithstanding the foregoing, all stock options, warrants, stock
appreciation rights and other other similar securities shall immediately vest
upon the occurrence of a Change of Control and at such time all conditions
applicable to contingently issued options, warrants, stock appreciation rights
and other securities shall be deemed waived by the Company.
6. TERMINATION. Employee's employment hereunder shall terminate
as a result of any of the following events:
(a) Employee's death;
(b) Employee shall be unable to perform his duties
hereunder by reason of illness, accident or other physical or mental disability
for a continuous period of at least nine months or an aggregate of twelve months
during any continuous eighteen month period ("Disability");
(c) voluntary termination by Employee; or
4
<PAGE> 5
(d) for Cause, where "Cause" shall mean: (i) final
non-appealable adjudication of Employee of a felony; or (ii) the reasonable
determination of eighty (80%) percent of the entire Board (other than Employee)
that Employee has engaged in material intentional misconduct or the gross
neglect of his duties, which has a continuing material adverse effect on the
business of the Company.
Any termination pursuant to subparagraph (b), (c) or (d) of
this Section shall be communicated by a written notice ("Notice of
Termination"), such notice to set forth with specificity the grounds for
termination if the result of "Cause". Employee's employment under this Agreement
shall be deemed to have terminated as follows: (i) if Employee's employment is
terminated pursuant to subparagraph (a) above, on the date of his death; (ii) if
Employee's employment is terminated pursuant to subparagraph (b) or (d) above,
on the date on which Notice of Termination is given; and (iii) if Employee's
employment is terminated pursuant to subparagraph (c) above, thirty (30) days
after the date on which a Notice of Termination is given. The date on which
termination is deemed to have occurred pursuant to this paragraph is hereinafter
referred to as the "Date of Termination".
7. PAYMENTS ON TERMINATION. In the event that Employee's
employment is terminated pursuant to Section 6 above, the Company shall pay to
Employee his full Base Salary through the Date of Termination together with all
incentive compensation, benefits and other compensation, if any, due and owing
as of that date, plus any Severance and Benefit Payments to which Employee may
be entitled hereunder.
8. BOARD OF DIRECTORS. The Company shall use its best efforts to
cause Employee to be elected as a member of the Board of Directors of the
Company and each of its subsidiaries at all times during the Term. Employee
shall agree to faithfully serve the Company as a member of all such Boards upon
election.
9. LIFE INSURANCE. If requested by the Company, Employee shall
submit to such physical examinations and otherwise take such actions and execute
and deliver such documents as may be reasonably necessary to enable the Company
to obtain life insurance on the life of Employee for the benefit of the Company.
10. REPRESENTATIONS AND WARRANTIES. Employee represents and
warrants to the Company that he is under no contractual or other restriction or
obligation that would prevent the performance of his duties hereunder or
interfere with the rights of the Company hereunder.
11. DISCLOSURE AND PROTECTION OF CONFIDENTIAL INFORMATION.
(a) For purposes of this Agreement, "Confidential
Information" means knowledge, information and material which is proprietary to
the Company, of which Employee may obtain knowledge or access through or as a
result of his employment by the Company (including information conceived,
originated, discovered or developed in whole or in part by Employee).
Confidential Information includes, but is not limited to, (i) technical
knowledge, information and material such as trade secrets, processes, formulas,
data, know-how, improvements, inventions, computer programs, drawings, patents,
and experimental and development work techniques, and (ii) marketing and other
5
<PAGE> 6
information, such as supplier lists, customer lists, marketing and business
plans, business or technical needs of customers, consultants, licensees or
suppliers and their methods of doing business, arrangements with customers,
consultants, licensees or suppliers, manuals and personnel records or data.
Confidential Information also includes any information described above which the
Company obtains from another party and which the Company treats as proprietary
or designates as confidential, whether or not owned or developed by the Company.
Notwithstanding the foregoing, any information which is or becomes available to
the general public otherwise than by breach of this Section 11 shall not
constitute Confidential Information for purposes of this Agreement.
(b) During the term of this Agreement and thereafter,
Employee agrees, to hold in confidence all Confidential Information and not to
use such information for Employee's own benefit or to reveal, report, publish,
disclose or transfer, directly or indirectly, any Confidential Information to
any person or entity, or to utilize any Confidential Information for any
purpose, except in the course of Employee's work for the Company.
(c) Employee will abide by any and all security rules and
regulations, whether formal or informal, that may from time to time be imposed
by the Company for the protection of Confidential Information, and will inform
the Company of any defects in, or improvements that could be made to, such rules
and regulations.
(d) Employee will notify the Company in writing
immediately upon receipt of any subpoena, notice to produce, or other compulsory
order or process of any court of law or government agency if such document
requires or may require disclosure or other transfer of Confidential
Information.
(e) Upon termination of employment, Employee will deliver
to the Company any and all records and tangible property that contain
Confidential Information that are in his possession or under his control.
12. COVENANT NOT TO COMPETE.
(a) In consideration for the Company entering into this
Agreement, Employee covenants and agrees that during the Term and for a one (1)
year period thereafter, Employee will not, without the express prior written
consent of the Company, directly or indirectly, compete with the business of the
Company anywhere within the United States of America. Employee will undertake no
activities that may lead Employee to compete with or to acquire rival,
conflicting or antagonistic interests to those of the Company with respect to
the business of the Company, whether alone, as a partner, or as an officer,
director, employee, independent contractor, consultant or shareholder holding 5%
or more of the outstanding voting stock of any other corporation, or as a
trustee, fiduciary or other representative of any other person or entity.
(b) During the Service Period and for a period of one (1)
year after termination of employment, Employee will not, directly or indirectly,
solicit or induce any other employee of the Company or any parent or affiliate
to leave his or her employment, or solicit or induce any consultant or
independent contractor to sever that person's relationship with the Company.
6
<PAGE> 7
(c) If any court shall determine that the duration or
geographical limit of any covenant contained in this Section 12 is
unenforceable, it is the intention of the parties that covenant shall not
thereby be terminated but shall be deemed amended to the extent required to
render it valid and enforceable, such amendment to apply only in the
jurisdiction of the court that has made such adjudication.
(d) Employee acknowledges and agrees that the covenants
contained in Sections 11 and 12 hereof are of the essence in this Agreement,
that each of such covenants is reasonable and necessary to protect and preserve
the interests, properties, and business of the Company, and that irreparable
loss and damage will be suffered by the Company should Employee breach any of
such covenants. Employee further represents and acknowledges that he shall not
be precluded from gainful engagement in a satisfactory fashion by the
enforcement of these provisions.
13. AVAILABILITY OF INJUNCTIVE RELIEF. Employee acknowledges and
agrees that any breach by him of the provisions of Sections 11 or 12 hereof will
cause the Company irreparable injury and damage for which it cannot be
adequately compensated in damages. Employee therefore expressly agrees that the
Company shall be entitled to seek injunctive and/or other equitable relief, on a
temporary or permanent basis to prevent any anticipatory or continuing breach of
this Agreement or any part hereof, and is secured as an enforcement. Nothing
herein shall be construed as a waiver by the Company of any right it may have or
hereafter acquired to monetary damages by reason of any injury to its property,
business or reputation or otherwise arising out of any wrongful act or omission
of it.
14. SURVIVAL. The covenants, agreements, representations and
warranties contained in or made pursuant to this Agreement shall survive
Employee's termination of employment, irrespective of any investigation made by
or on behalf of any party.
15. MODIFICATION. This Agreement sets forth the entire
understanding of the parties with respect to the subject matter hereof,
supersedes all existing agreements between them concerning such subject matter,
and may be modified only by a written instrument duly executed by each party.
16. NOTICES. Any notice required or permitted hereunder shall be
deemed validly given if delivered by hand, verified overnight delivery, or by
first class, certified mail to the following addresses (or to such other address
as the addressee shall notify in writing to the other party):
If to Employee: Timothy E. Mahoney
68 Cayman Place
Palm Beach Gardens, Florida 33418
If to the Company: Peachtree Fiberoptics, Inc.
3300 PGA Blvd., Suite 810
Palm Beach Gardens, Florida 33410
Attention: President
7
<PAGE> 8
with a copy to: Richard N. Bernstein, Esq.
Cohen, Berke, Bernstein,
Brodie & Kondell, P.A.
2601 South Bayshore Drive, 19th Floor
Miami, Florida 33133
17. WAIVER. Any waiver by either party of a breach of any
provision of this Agreement shall not operate as or be construed to be a waiver
of any other breach of such provision or of any breach of any other provision of
this Agreement. The failure of a party to insist upon strict adherence to any
term of this Agreement on one or more occasions shall not be considered a waiver
or deprive that party of the right thereafter to insist upon strict adherence to
that term or any other term of this Agreement. All waivers must be in writing.
18. BINDING EFFECT. the Company's rights and obligations under
this Agreement shall not be transferable by assignment or otherwise, and any
attempt to do any of the foregoing shall be void. The provisions of this
Agreement shall be binding upon the Employee and his heirs and personal
representatives, and shall be binding upon and inure to the benefit of the
Company, its successors and assigns.
19. HEADINGS. The headings in this Agreement are solely for
convenience of reference and shall be given no effect in the construction or
interpretation of this Agreement.
20. GOVERNING LAW; VENUE. This Agreement is to be performed in the
State of Florida, and the validity, construction and enforcement of, and the
remedies under, this Agreement shall be governed in accordance with the laws of
the State of Florida, without giving effect to any choice of laws principles. In
the event of any litigation arising out of or relating to this Agreement,
exclusive venue shall be in West Palm Beach - Palm Beach County, Florida.
21. ENTIRE AGREEMENT. This writing constitutes the binding and
entire agreement of the parties superseding and extinguishing all prior
agreements or understandings regarding the subject matter hereof, and may not be
modified without the written agreement by the parties.
22. INVALIDITY. The invalidity or unenforceability of any term of
this Agreement shall not invalidate, make unenforceable or otherwise affect any
other term of this Agreement, which shall remain in full force and effect.
23. ATTORNEYS' FEES. In the event any dispute or litigation arises
hereunder between any of the parties hereto, the prevailing party shall be
entitled to all reasonable costs and expenses incurred by it in connection
therewith (including, without limitation, all reasonable attorneys' fees and
costs incurred before and at any trial or other proceeding and at all tribunal
levels), as well as all other relief granted in any suit or other proceeding.
8
<PAGE> 9
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first hereinabove written.
EMPLOYER:
PEACHTREE FIBEROPTICS, INC., a Delaware
corporation
By: /s/ SIDNEY LEVINE
------------------------------------
Sidney Levine
Title: Director
EMPLOYEE:
/s/ TIMOTHY MAHONEY
----------------------------------------
Timothy E. Mahoney
9
<PAGE> 1
Exhibit 10.7
- --------------------------------------------------------------------------------
PEACHTREE FIBEROPTICS, INC.
- --------------------------------------------------------------------------------
VIA FAX
October 29, 1999
David Spector
c/o Peachtree FiberOptics, Inc.
3300 PGA Blvd., Suite 810
Palm Beach Gardens, FL 33410
Dear David:
This letter will confirm our offer of employment at Peachtree FiberOptics, Inc.
("VFIN") which intends to merge with vFinance Holdings, Inc. and Union Atlantic
LC. VFIN has agreed to provide you the following compensation:
1. $75,000 annual base salary to be paid bi-weekly which will begin
immediately upon VFIN's closing of its $5 million private placement
which is currently being presented to financial and venture capital
institutions ("Funding").
2. Options to acquire 75,000 common shares of VFIN at an exercise price of
$2.50 per share ("Options"). Except as provided herein below the
Options shall expire October 28, 2004. The Options shall vest and be
exercisable pursuant to the following terms and conditions:
a. 3,000 options shall be vested immediately;
b. 3,000 options shall vest each month for 11 months beginning
November 28, 1999 and on the 28th day of each much thereafter;
c. 19,500 options shall vest October 28, 2000;
d. 19,500 options shall vest October 28, 2001;
e. In the event you resign or are terminated, then all non-vested
Options shall expire and shall be deemed null and void; you
shall have 30 days from the date of such resignation or
termination to exercise Options which have vested after which
time any such vested Options which remain unexercised shall
expire and shall be null and void;
f. In the event of your death while you are an employee of VFIN,
your family shall have the right to exercise any vested
Options within 90 days of your death;
g. The Options are not assignable.
3. It is the intention of VFIN to establish a bonus/incentive program as
soon as possible following the Funding. It is the intention of VFIN to
register the common shares underlying the Options as soon as practible.
4. You shall be entitled to all other benefits available to employees of
VFIN.
PEACHTREE FIBEROPTICS, INC.
By: /s/ Leonard J. Sokolow
------------------------------------------------
Leonard J. Sokolow, Authorized Representative
3300 PGA BLVD., SUITE 810, PALM BEACH GARDENS, FLORIDA 33410,
VOICE: (305) 374-3575 FAX: (206) 374-5879
<PAGE> 1
Exhibit 10.8
- --------------------------------------------------------------------------------
PEACHTREE FIBEROPTICS, INC.
- --------------------------------------------------------------------------------
VIA FAX
Union Atlantic Partners I, Ltd.
Attention: Stephen Hutchings
Gentlemen:
This letter is to confirm our agreement that Union Atlantic Partners I, Ltd.
shall convert as of December 31, 1999 $25,000 of the debt due and owing to Union
Atlantic Partners I, Ltd. from vFinance Holdings, Inc. into 8,400 shares of VFIN
(OTC BB) (Peachtree FiberOptics, Inc.) in full and complete satisfaction of such
debt. Peachtree FiberOptics, Inc. owns 100% of vFinance Holdings, Inc. Such
shares are not registered and cannot be sold in the public markets for 1 year
from the date of issue. These shares can be transferred privately at any time.
Please confirm this Agreement by signing as indicated herein below.
PEACHTREE FIBEROPTICS, INC.
By: /s/ Leonard Sokolow
---------------------------------------
Leonard J. Sokolow, Managing Agent
Agreed to and accepted as of this 31st day of
December 1999
UNION ATLANTIC PARTNERS I, LTD.
By: /s/ F.M.C. Limited -- Director
----------------------------------------
Authorized Representative
3300 PGA BLVD., SUITE 810, PALM BEACH GARDENS, FLORIDA 33410,
VOICE: (305) 374-0282 FAX: (206) 374-5879
<PAGE> 1
Exhibit 10.9
PURCHASE AGREEMENT
THIS PURCHASE AGREEMENT (the "Agreement") dated as of December 24, 1999
by and between Steven C. Jacobs ("Jacobs") and Mauricio Borgonovo ("Borgonovo")
("Sellers") and Peachtree FiberOptics, Inc., a Delaware corporation
("Purchaser"). Definitions of capitalized terms used in Articles 1 through 7
herein which are not otherwise defined are set forth in Section 8.1.
W I T N E S S E T H:
WHEREAS, the Sellers own all of the membership interests (the
"Interests") in Pinnacle Capital Group, L.C., a Florida limited liability
company (the "Company"); and
WHEREAS, in reliance upon the representations, warranties and covenants
contained in this Agreement, Purchaser desires to purchase the Interests from
Sellers;
NOW, THEREFORE, in consideration of the foregoing premises, and the
representations, warranties, covenants and agreements contained herein, and for
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties hereby agree as follows:
ARTICLE 1.
PURCHASE AND SALE OF INTERESTS
SECTION 1.1 PURCHASE AND SALE. Subject to the provisions of this
Agreement, on the Closing Date (as hereinafter defined), Purchaser shall
purchase from Sellers, and Sellers shall sell to Purchaser, the Interests in
consideration of the Purchase Price.
SECTION 1.2 PURCHASE PRICE. The aggregate purchase price (the "Purchase
Price") for the Interests shall be:
Each Seller will be issued a warrant (collectively, the
"Warrants") with each Warrant giving the holder the right to purchase 5,000
shares of Purchaser's common stock, exercisable for a period of five years
following the Closing Date (defined below) at an exercise price of $2.50 per
share, pursuant to the form of Warrant Certificate attached hereto as Exhibit A.
ARTICLE 2.
CLOSING
SECTION 2.1 THE CLOSING. The consummation of the transactions
contemplated by this Agreement (the "Closing") shall take place one business day
after NASD approval of the sale of the Company to Purchaser at the offices of
Cohen, Berke, Bernstein, Brodie & Kondell, P.A., 2601 South Bayshore Drive,
Suite 1900, Miami, Florida 3313 with the execution of this Agreement. The date
of the Closing shall be referred to as the "Closing Date".
SECTION 2.2 DELIVERIES AT CLOSING. At the Closing:
(a) There shall be delivered to the Sellers;
(i) the Warrants;
<PAGE> 2
(ii) Certificate of good standing of Purchaser;
(iii) Certified Resolutions of the Board of
Directors of Purchaser approving all
transactions contemplated herein.
(b) There shall be delivered to Purchaser:
(i) An assignment of the Interests executed by
each of the Sellers;
(ii) Certificate of good standing of the Company;
(iii) Executed certificates required by Section
5.2.
ARTICLE 3.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company, Jacobs and Borgonovo represent and warrant to Purchaser as
follows:
SECTION 3.1 STATUTORY EXISTENCE AND POWER. The Company is a limited
liability company duly organized, validly existing and in good standing under
the laws of the State of Florida, and has all requisite corporate powers and all
material Permits required to carry on the Business as now conducted. The Company
is not qualified to do business as a foreign corporation in any jurisdiction.
The Company does not directly or indirectly own any interest or investment in
any other person.
SECTION 3.2 AUTHORITY RELATIVE TO THIS AGREEMENT. Each Seller has full
power, capacity and authority to execute and deliver this Agreement and each
other Transaction Document to which he is a party and to consummate the
transactions contemplated hereby and thereby (the "Contemplated Transactions").
This Agreement and the other Transaction Documents to which Sellers are a party
have been duly and validly executed and delivered by each of the Sellers and
(assuming the valid execution and delivery thereof by the other parties thereto)
constitute the legal, valid and binding agreements of the Sellers enforceable
against them in accordance with their respective terms.
SECTION 3.3 NO CONFLICTS, CONSENTS. The execution, delivery and
performance by the Sellers of this Agreement and each other Transaction Document
to which they are a party, the consummation of the Contemplated Transactions to
which they are a party will not (i) violate any provision of the Articles of
Organization, Regulations, Operating Agreement or other charter document or
agreement among the Members of the Company; (ii) require the Sellers to obtain
any consent, approval or action of or waiver from, or make any filing with, or
give any notice to, any Governmental Body or any other Person other than the
NASD; (iii) violate, conflict with or result in a breach or default under (after
the giving of notice or the passage of time or both), or permit the termination
of, any Contract to which the Company is a party or by which it or any of their
Assets may be bound or subject, or result in the creation of any Lien upon any
of the Assets of the Company pursuant to the terms of any such Contract; or (iv)
violate any Law or Order of any Governmental Body against, or binding upon, the
Company or upon its Assets or the Business; or (v) violate or result in the
revocation or suspension of any Permit.
SECTION 3.4 CHARTER DOCUMENTS AND CORPORATE RECORDS. The Company has
heretofore delivered to Purchaser true and complete copies of the Articles of
Organization, Regulations, Operating Agreement and other charter documents and
agreements among the Members of the Company, as in effect on the date hereof.
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<PAGE> 3
The minute and transfer books of the Company have been made available to
Purchaser for inspection and are true and complete.
SECTION 3.5 FINANCIAL INFORMATION. The Company has furnished to
Purchaser true and complete copies of (i) the Company's unaudited financial
statements at and for the calendar years ended December 31, 1998 (the "Annual
Statements"), (ii) the Company's unaudited financial statements at and for each
calendar quarter of 1999 through September 30, 1999, (iii) all management
letters, and attorney audit response letters, if any, issued in connection with
the Company's financial statements for each of the three years comprising the
Annual Statements, (iv) all Focus reports and other filings and
financially-related correspondence with the NASD, and (v) a balance sheet dated
as of November 30, 1999 (the "Latest Balance Sheet"). Each financial statement
presents fairly the financial position of the Company as of its date and its
earnings for the periods then ended. Each delivered balance sheet fully sets
forth all Assets and Liabilities of the Company existing as of its date which,
under GAAP, should be set forth therein, and each delivered statement of
earnings sets forth the items of income and expense of the Company which should
appear therein under GAAP. All financial and accounting books, ledgers, accounts
and official and other records relating to the Company have been properly and
accurately kept and completed in all material respects.
SECTION 3.6 LIABILITIES. Except as and to the extent reflected in the
Latest Balance Sheet, to Sellers' knowledge, the Company does not have any
Liabilities or obligations. Except Liabilities reflected on the Latest Balance
Sheet, there has been (i) no material adverse change in the Assets or
Liabilities, or in the Business or condition of the Company, financial or
otherwise, or the result of operations of the Company, and (ii) no change in the
Assets or Liabilities or in the Business or condition of the Company, financial
or otherwise, or in the results of operations or prospects of the Company,
except in the ordinary course of business; and (iii) no factor or condition
exists or, to the Company's knowledge and belief, is contemplated or threatened,
which might cause such a change in the future.
SECTION 3.7 RECEIVABLES. All Receivables of the Company are valid and
enforceable claims, constitute bona fide Receivables resulting from the sale of
goods and services in the ordinary course of the Business, and are not subject
to any defenses, offsets, returns, allowances or credits of any kind.
SECTION 3.8 ABSENCE OF CERTAIN CHANGES. Since the date of the Latest
Balance Sheet, the Company has conducted the Business in the ordinary course
consistent with past practices and there has not been: (a) any material adverse
change in the Condition of the Business or any event, occurrence or circumstance
that could reasonably be expected to cause such a material adverse change; (b)
any transaction or Contract with respect to the purchase, acquisition, lease,
disposition or transfer of any Assets or to any capital expenditure (in each
case, other than in the ordinary course of the Business in accordance with past
practice), in excess of $5,000; (c) any change in any method of accounting or
accounting practice by the Company; (d) any material adverse change in the
relationships of the Company with its customers, suppliers and vendors; or (e)
except in the ordinary course of the Business, consistent with past practice,
any payment, directly or indirectly, of and Liability before or after the same
became due in accordance with its terms.
SECTION 3.9 PROPERTIES. The Company has good and marketable title to
all of the Assets, including, without limitation, personal property used in the
Business, free and clear of all Liens. The equipment and other tangible personal
property constituting a part of the Assets (whether owned or leased), are in
good condition and repair (subject to normal wear and tear) and are adequate in
quantity and quality for the operation of the Business as presently conducted.
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<PAGE> 4
SECTION 3.10 CONTRACTS.
(a) Schedule 3.10 sets forth an accurate and complete list of
all material Contracts to which the Company is a party or by which it or its
Assets are bound or subject. True and complete copies of all written Contracts
of the Company and summaries of the material provisions of all oral Contracts so
listed have been delivered to Purchaser.
(b) All Contracts listed on Schedule 3.10 are valid, existing,
in full force and effect and binding upon the Company and, to the knowledge of
Sellers, the other parties thereto in accordance with their terms. The Company
is not in material default (or alleged default) under any Contract, or, to the
knowledge of the Sellers, is any other party thereto in material default
thereunder, nor does any condition exist that with notice or the lapse of time
or both would constitute a material default (or give rise to a termination
right) thereunder. Since the Latest Balance Sheet Date, the Company has not
waived any right under any such Contract, amended or extended beyond June 30,
2000 any such Contract or terminated or failed to renew (or received notice of
termination or failure to renew with respect to) any such Contract. Schedule
3.10 further identifies all Contracts for which a third party consent or
notification is required for the assignment thereof by the Company to Purchaser
("Third Party Consents").
SECTION 3.11 INTANGIBLE PROPERTY. The Company does not own any patents,
trademarks, trade names, copyrights, Intellectual Property and service marks. In
particular, the Company does not have any proprietary rights in, or the right to
continue to use, the name "Pinnacle."
SECTION 3.12 CLAIMS AND PROCEEDINGS. There are no outstanding Orders of
any Governmental Body against or involving the Company or the Business. There
are no actions, suits, claims or counterclaims or legal, administrative or
arbitral proceedings or investigations (collectively, "Claims") (whether in
respect thereof are covered by insurance), pending or, to the knowledge of the
Sellers, threatened on the date hereof, against or involving the Company, any of
the Company's Assets or the Business.
SECTION 3.13 TAXES. The Company has timely filed or, if not yet due,
will timely file all Tax Returns required to be filed by it for all taxable
periods ending on or before the Closing Date and all such Tax Returns are true,
correct and complete in all material respects. The Company has paid or, if
payment is not yet due, will pay to the appropriate Tax Authority or has
established, in accordance with GAAP and consistent with past practice, accruals
that are reflected on the Latest Balance Sheet for the payment of, all Taxes of
the Company for all taxable periods ending on or before the Closing Date. No
extension of time has been requested or granted for the Company to file any Tax
Return that has not yet been filed or to pay any Tax that has not yet been paid.
The Company has not received notice of a determination by a Tax authority that
Taxes are owed by the Company (such determination to be referred to as a "Tax
Deficiency") and, to the knowledge of the Company, no Tax Deficiency is proposed
or threatened. All Tax Deficiencies, if any, have been paid or finally settled
and all amounts determined by settlement to be owed have been paid. There are no
Tax Liens on or pending against the Company or any of the Assets. There are no
presently outstanding waivers or extensions or requests for waiver or extension
of the time within which a Tax Deficiency may be asserted or assessed. No issue
has been raised in any examination, investigation, audit, suit, action, claim or
proceeding relating to Taxes (a "Tax Audit") which, by application of similar
principles to any past, present or future period, would result in a Tax
Deficiency for such period. There are no pending or, to the knowledge of the
Company, threatened Tax Audits of the Company. The Company has never been
required to include in income any adjustment pursuant to Section 481 of the Code
and no Tax authority has ever made or proposed any such adjustment. The Company
has maintained and has in its possession all records, supporting documents and
exemption certificates required by applicable sales Tax statutes and regulations
to be retained in connection with the collection and remittance of sales and use
Taxes for all periods up to and including the Closing Date. The Company shall be
responsible for the payment of all state and
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<PAGE> 5
local Taxes arising from or relating to the sale of the Assets and the
Contemplated Transactions. The aforementioned nothwithstanding, if required, the
Sellers shall undertake to file the 1998 Federal tax return no later than
January 15, 2000.
SECTION 3.14 COMPLIANCE WITH LAWS. The Company is not in material
violation of any order, judgment, injunction, award, citation, decree, consent
decree or writ applicable to the Company (collectively, "Orders"), or any law,
statute, code, ordinance, rule, regulation or other requirement (collectively,
"Laws"), of any government or political subdivision thereof, whether federal,
state, local or foreign, or any agency or instrumentality of any such government
or political subdivision, or any court or arbitrator (collectively,
"Governmental Bodies") affecting its Assets or the Business.
SECTION 3.15 PERMITS. The Company has obtained all licenses, permits,
certificates, certificates of occupancy, orders, authorizations and approvals of
(collectively, "Permits"), and have made all required registrations and filings
with, any Governmental Body that are material to the conduct of the Business.
SECTION 3.16 FINDERS FEES. There is no investment banker, broker,
finder or other intermediary which has been retained by or is authorized to act
on behalf of the Company who might be entitled to any fee or commission from the
Company upon consummation of the Contemplated Transactions.
SECTION 3.17 FEES, COMMISSIONS AND ROYALTIES. The Company has no
relationships with any distributors, agents, partners, employees or other
representatives anywhere in the world which is entitled to fees, commissions,
royalties or any other payments as a result of the sale of the Company's
securities, products, services, or pursuant to its on going business, except as
described herein. Marc Cabrera is entitled to one-third of any success fee
generated in connection with The Graduate Group, Inc.
SECTION 3.18 SOFTWARE. The Company does not own any of the software
used in connection with the Business.
SECTION 3.19 DISCLOSURE. Neither this Agreement, nor the Schedules
hereto, or any audited or unaudited financial statements, documents or
certificates furnished or to be furnished to Purchaser by or on behalf of the
Company pursuant to this Agreement contains any untrue statement of a material
fact or omits to state a material fact necessary in order to make the statements
contained herein or therein not misleading.
SECTION 3.20 INSOLVENCY PROCEEDINGS. No insolvency proceedings,
including bankruptcy, receivership, reorganization, composition or arrangement
with creditors, are pending or threatened against the Company.
ARTICLE 4.
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser makes the following representations and warranties to Jacobs
and Borgonovo:
SECTION 4.1 ORGANIZATION AND GOOD STANDING. Purchaser is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Florida and is duly qualified to do business in all states where its
activities make such qualification necessary.
SECTION 4.2 AUTHORITY. Purchaser has full power and has taken all
corporate action necessary to execute, deliver and perform this Agreement and to
carry out the transactions
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<PAGE> 6
contemplated hereby. The execution, delivery and performance of the obligations
of Purchaser under this Agreement has been, or will be on the Closing Date, duly
and effectively authorized by Purchaser's Board of Directors and no further
corporate authority therefor or approval thereof is required by law.
SECTION 4.3 CONFLICTS. The execution, delivery and performance of this
Agreement shall not conflict with or result in the breach or violation of the
Purchaser's Articles of Incorporation, By-Laws or any contract, agreement,
lease, commitment, license, permit, authorization or concession to which it is a
party or by which it is bound, or any statute, rule, regulation, ordinance,
code, order, judgment, writ, injunction, decree or award of any court or
administrative or governmental body, or constitute an event which with notice,
lapse of time, or both, would result in any such breach, or violation and which
would have a material adverse effect on the Purchaser.
SECTION 4.4 CHARTER DOCUMENTS AND CORPORATE RECORDS. The Company has
heretofore delivered to Purchaser true and complete copies of the Articles of
Incorporation and Bylaws, as in effect on the date hereof.
ARTICLE 5.
CONDITIONS PRECEDENT TO CLOSING
SECTION 5.1 CONDITIONS TO THE OBLIGATIONS OF THE COMPANY. All
obligations of the Sellers hereunder are subject, at the option of the Seller,
to the fulfillment prior to or at the Closing of each of the following
conditions:
(a) PERFORMANCE. Purchaser shall have performed and complied
in all material respects with all agreements, obligations and covenants required
by this Agreement to be performed or complied with by it at or pior to the
Closing Date.
(b) DOCUMENTATION. There shall have been delivered to the
Sellers the following:
(i) A certificate, dated the Closing Date, of the
Secretary or Assistant Secretary of Purchaser certifying, among other things,
that attached or appended to such certificate (A) is a true and correct copy of
its Articles of Incorporation and all amendments if any thereto as of the date
thereof; (B) is a true and correct copy of its By-laws as of the date hereof,
(C) is a true copy of all corporate actions taken by it, including resolutions
of its board of directors authorizing the execution, delivery and performance of
this Agreement, and each other document to be delivered by such party pursuant
hereto; and (D) are the names and signatures of its duly elected or appointed
officers who are authorized to execute and deliver this Agreement and any
certificate, document or other instrument in connection herewith.
(ii) Evidence of the good standing and corporate
existence of Purchaser as may be reasonably requested by the Sellers.
(c) MERGER. Purchaser shall have effectuated a merger with
Vfinance.com, Inc. and Union Atlantic, L.C., pursuant to which Purchaser is the
surviving corporation.
(d) DELIVERIES. All deliveries required to be made to the
Sellers pursuant to Section 2.2(a) shall have been made.
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<PAGE> 7
SECTION 5.2 CONDITIONS TO THE OBLIGATIONS OF PURCHASER. All obligations of
Purchaser hereunder are subject, at the option of Purchaser, to the fulfillment
prior to or at the Closing of each of the following further conditions,
(a) PERFORMANCE. The Sellers shall have performed and complied
in all respects with all agreements, obligations and covenants required by this
Agreement to be performed or complied with by them at or prior to the Closing
Date.
(b) CONSENTS. All Required Consents and Third Party Consents
shall have been obtained.
(c) SCHEDULES. All schedules not delivered to Purchaser upon
execution hereof, and all updates to schedules delivered upon execution hereof,
shall have been delivered prior to Closing and accepted and agreed to by
Purchaser in its sole discretion.
(d) DOCUMENTATION. There shall have been delivered to
Purchaser the following:
(i) A certificate, dated the Closing Date, of the
President and Secretary of the Company certifying, among other things, that
attached or appended to such certificate (A) is a true and correct copy of its
Articles of Organization and all amendments if any thereto as of the date
thereof; (B) is a true and correct copy of its Regulations, Operating Agreement
or other charter documents and agreements among Members; (C) is a true copy of
all corporate actions taken by it, including resolutions of all of its members
and managers authorizing the execution, delivery and performance of this
Agreement, and each other document to be delivered by such party pursuant
hereto; and (D) are the names and signatures of its duly elected or appointed
officers who are authorized to execute and deliver this Agreement and any
certificate, document or other instrument in connection herewith.
(ii) Evidence of the good standing and corporate
existence of the Company.
(iii) Copies of all Required Consents and Permits.
(e) DELIVERIES. All deliveries required to be made to the
Company pursuant to Section 2.2(b) shall have been made.
ARTICLE 6.
INDEMNIFICATION
SECTION 6.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES.
(a) All representations, warranties, covenants and agreements
contained in this Agreement shall survive the execution and delivery of this
Agreement and the Closing hereunder. Notwithstanding the foregoing, all
representations and warranties of the Sellers contained in this Agreement, on
any Schedule hereto or in any instrument delivered in connection with or
pursuant to this Agreement, the indemnification obligations of the Sellers in
respect of the matters specified in Section 6.2 shall terminate and expire two
years after the Closing Date; PROVIDED, however, that the liability of the
Sellers shall not terminate as to any specific claim or claims of the type
referred to in Section 6.2 hereof, whether or not fixed as to liability or
liquidated as to amount, with respect to which the Sellers have been given
specific notice on or prior to the date on which such liabilities would
otherwise terminate pursuant to the terms of this Section 6.1.
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<PAGE> 8
(b) All representations, warranties, covenants and agreements
of Purchaser shall terminate and expire two years after the Closing Date,
provided, however, that the liability of Purchaser shall not terminate as to any
specific claim or claims of the type referred to in Section 6.3 hereof, whether
or not fixed as to liability or liquidated as to amount, with respect to which
Purchaser has been given specific notice on or prior to the date on which such
Liability would otherwise terminate pursuant to the terms of this Section 6.1.
SECTION 6.2 OBLIGATION OF THE SELLERS TO INDEMNIFY. The Sellers agree
to indemnify, defend and hold harmless Purchaser (and its respective directors,
officers, employees, Affiliates, successors and assigns) from and against all
Claims, losses, liabilities, damages, deficiencies, judgments, settlements,
costs of investigation or other expenses (including interest, penalties and
reasonable attorneys' fees and disbursements and expenses incurred in enforcing
this indemnification) (collectively, the "Losses") suffered or incurred by
Purchaser or any of the foregoing persons arising out of (i) any breach of the
representations and warranties of Jacobs and Borgonovo contained in this
Agreement or in the Schedules or any Transaction Document, or (ii) any breach of
the covenants and agreements of Jacobs and Borgonovo contained in this Agreement
or in the Schedules or any Transaction Document.
SECTION 6.3 OBLIGATION OF PURCHASER TO INDEMNIFY. Purchaser agrees to
indemnify, defend and hold harmless the Company, Jacobs and Borgonovo from and
against any Losses suffered or incurred by the Company, Jacobs and Borgonovo
arising out of any breach of the representations and warranties of Purchaser or
of the covenants and agreements of Purchaser contained in this Agreement or in
the Schedules or any Transaction Document.
SECTION 6.4 NOTICE AND OPPORTUNITY TO DEFEND THIRD PARTY CLAIMS.
(a) Promptly after receipt by any party hereto (the
"Indemnitee") of notice of any demand, claim, circumstance or audit which would
or might give rise to a claim or the commencement (or threatened commencement)
of any action, proceeding or investigation (an "Asserted Liability") that may
result in a Loss, the Indemnitee shall give prompt notice thereof (the "Claims
Notice") to the party or parties obligated to provide indemnification pursuant
to Section 6.2 or 6.3 (collectively, the "Indemnifying Party"). The Claims
Notice shall describe the Asserted Liability in reasonable detail and shall
indicate the amount (estimated, if necessary, and to the extent feasible) of the
Loss that has been or may be suffered by the Indemnitee. The rights of the
Indemnifying Party to defend Asserted Liabilities under Section 6.4(b) in the
case of Asserted Liabilities against the Company shall be exercised by the
Company.
(b) The Indemnifying Party may elect to defend, at its own
expense and with its own counsel, any Asserted Liability unless (i) the Asserted
Liability seeks an injunction or other equitable or declaratory relief against
the Indemnitee or (ii) the Indemnitee shall have reasonably concluded that there
is a conflict of interest between the Indemnitee and the Indemnifying Party in
the conduct of such defense. If the Indemnifying Party elects to defend such
Asserted Liability, it shall within thirty (30) days (or sooner, if the nature
of the Asserted Liability so requires) notify the Indemnitee of its intent to do
so, and the Indemnitee shall cooperate, at the expense of the Indemnifying
Party, in the defense of such Asserted Liability. If the Indemnifying Party
elects not to defend the Asserted Liability, is not permitted to defend the
Asserted Liability by reason of the first sentence of this Section 6.4(b), fails
to notify the Indemnitee of its election as herein provided or contests its
obligation to indemnify under this Agreement with respect to such Asserted
Liability, the Indemnitee may pay, compromise or defend such Asserted Liability
at the sole cost and expense of the Indemnifying Party. Notwithstanding the
foregoing, neither the Indemnifying Party nor the Indemnitee may settle or
compromise any claim over the reasonable written objection of the other,
provided that the Indemnitee may settle or compromise any claim as to which the
Indemnifying Party
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<PAGE> 9
has failed to notify the Indemnitee of its election under this Section 6.4(b) or
as to which the Indemnifying Party is contesting its indemnification obligations
hereunder and provided further, that if any Indemnitee shall fail to consent to
the monetary terms of any proposed settlement or compromise of any Asserted
Liability, the Indemnifying Party shall not thereafter be obligated to pay the
Indemnitee in respect of such Asserted Liability under this Article 6 in excess
of the amount it would have been required to pay to the Indemnitee in connection
with such proposed settlement or compromise. In any event, the Indemnitee and
the Indemnifying Party may participate, at their own expense, in the defense of
any Asserted Liability. If the Indemnifying Party chooses to defend any Asserted
Liability, the Indemnitee shall make available to the Indemnifying Party any
books, records or other documents within its control that are necessary or
appropriate for such defense. Any Losses of any Indemnitee for which
indemnification is available hereunder shall be paid within thirty (30) days
following written demand thereof.
(c) The liability of each of the Sellers pursuant to this
Section 6.4 shall be limited to the lesser of (i) the market value of his
Warrant on the Closing Date or (ii) the market value of his Warrant on the date
the first Claims Notice is received by him.
(d) The indemnification obligations contained in this Section
6.4 shall be the sole and exclusive remedy of either the Company or Sellers for
any breach by the other of the representation, warranties, covenants or
agreement contained in this Agreement.
ARTICLE 7.
MISCELLANEOUS PROVISIONS
SECTION 7.1 NOTICES. All notices which are permitted or required under
this Agreement shall be in writing and delivered by hand, by verified overnight
delivery, or by certified mail, postage prepaid, addressed as follows, or to
such other person or address as may be designated by written notice by one party
to the other parties:
If to Purchaser: Peachtree Fiberoptics, Inc.
3300 PGA Boulevard, Suite 810
Palm Beach Gardens, Florida 33410
Attention: President
With a copy to: Richard N. Bernstein, Esq.
Cohen, Berke, Bernstein,
Brodie & Kondell, P.A.
Terremark Centre, 19th Floor
2601 South Bayshore Drive
Miami, Florida 33133
If to the Company: Pinnacle Capital Group, L.C.
1401 Brickell Avenue, Suite 660
Miami, Florida 33131
Attention: President
Notices shall be deemed delivered when delivered by the carrier as provided
above, as determined by the carrier receipt and/or confirmation of delivery
notice. The addresses set forth above shall be conclusive for all purposes
unless and until written notice of a change of address shall be sent to the
parties herein.
SECTION 7.2 NO ASSIGNMENT. This Agreement may not be assigned by either
party without the prior written consent of the other party.
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<PAGE> 10
SECTION 7.3 SEVERABILITY. Any provision of this Agreement which is
invalid or unenforceable shall be ineffective to the extent of such invalidity
or unenforceability, without affecting in any way the remaining provision
hereof.
SECTION 7.4 GOVERNING LAW. This Agreement is deemed to have been made
in the State of Florida and its interpretations, its construction and the
remedies for its enforcement or breach are to be applied pursuant to, and in
accordance with, the laws of the State of Florida for contracts made and to be
performed in that State.
SECTION 7.5 SCHEDULES. It is acknowledged and agreed that all exhibits
and schedules to this Agreement are an integral part hereof and are
incorporated, in total, by reference fully as a part of this Agreement in all
respects.
SECTION 7.6 INCORPORATION AND AMENDMENT. This writing constitutes the
entire Agreement of the parties superseding and extinguishing all prior
agreements or understandings, representations or warranties, relating to the
subject matter hereof. This Agreement may not be modified, amended or terminated
except by written agreement specifically referring to this Agreement signed by
the parties hereto.
SECTION 7.7 REMEDIES. Each of the parties hereto agrees that any
dispute arising among the parties hereto shall be settled by a court of
competent jurisdiction in accordance with applicable law and that the parties
shall be free to petition the court for all appropriate legal and/or equitable
remedies inclusive of specific performance and injunctive relief.
SECTION 7.8 WAIVER. No waiver of any breach or default hereunder shall
be considered valid unless in writing and signed by the party giving such
waiver, and no such waiver shall be deemed a waiver of any subsequent breach or
default of the same or similar nature.
SECTION 7.9 HEADINGS. The paragraph headings contained herein are for
the purpose of convenience only and are not intended to define or limit the
contents of said paragraphs.
SECTION 7.10 FURTHER ACTION. Each party hereto shall take such further
action and shall execute and deliver such further documents as may be reasonably
requested by the other party in order to carry out the provisions and purposes
of this Agreement.
SECTION 7.12 COUNTERPARTS. This Agreement may be executed in one or
more counterparts, all of which taken together shall be deemed one original.
SECTION 7.13 VENUE. The parties hereto mutually agree that proper venue
with respect to any dispute arising hereunder, related hereto and connected
herewith shall be Broward County, Florida.
SECTION 7.14 NO THIRD-PARTY BENEFICIARY. Except as otherwise provided
herein, nothing expressed or implied in this Agreement is intended, or shall be
construed, to confer upon or give any person other than the parties hereto and
their respective heirs and permitted successors or assigns hereunder any rights
or remedies under or by reason of this Agreement.
SECTION 7.15 REMEDIES CUMULATIVE. No remedy made available by any of
the provisions of this Agreement is intended to be exclusive of any other
remedy, each and every remedy shall be cumulative and shall be in addition to
every other remedy given hereunder or now or hereafter existing at law or in
equity.
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<PAGE> 11
SECTION 7.15 PUBLIC ANNOUNCEMENTS. Neither party shall, without prior
written consent from the other, issue any press release or furnish any written
statement to its employees or to the public concerning the transactions
contemplated by this Agreement.
ARTICLE 8.
DEFINITIONS
SECTION 8.1 DEFINITIONS. The following terms, as used herein, have the
following meanings:
"AFFILIATE" of any person means any other person directly or
indirectly through one or more intermediary persons, controlling, controlled by
or under common control with such person.
The term "AUDIT" or "AUDITED" when used in regard to financial
statements shall mean an examination of the financial statements by a firm of
independent certified public accountants in accordance with generally accepted
auditing standards for the purpose of expressing an opinion thereon.
"BUSINESS" shall mean the ownership and operation of the
Assets comprising the business operations of the Company.
"CONTRACT" shall mean any contract, agreement, indenture,
note, bond, lease, conditional sale contract, mortgage, license, franchise,
instrument, commitment or other binding, arrangement, whether written or oral.
"GAAP" shall mean generally accepted accounting principles in
effect on the date hereof as set forth in the opinions and pronouncements of the
Accounting Principles Board of the American Institute of Certified Public
Accountants and statements and pronouncements of the Financial Accounting
Standards Board or in such other statements by such other entity as may be
approved by a significant segment of the accounting profession of the United
States.
"INVENTORY" shall mean, as of any date, collectively, all
inventories of products, supplies and materials owned by the Company and held
for sale, distribution or license, together with packaging and samples thereof,
owned by the Company as of such date.
The term "KNOWLEDGE" with respect to (a) any individual shall
mean actual knowledge and (b) any corporation shall mean the actual knowledge of
the directors and the executive officers of such corporation; and "KNOWS" has a
correlative meaning.
"LIABILITY" shall mean any direct or indirect indebtedness,
liability, assessment, claim. loss, damage, deficiency, obligation or
responsibility, fixed or unfixed, choate or inchoate. liquidated or
unliquidated, secured or unsecured, accrued, absolute, actual or potential,
contingent or otherwise (including any liability under any guaranties, letters
of credit, performance credits or with respect to insurance loss accruals).
"LIEN" shall mean, with respect to any Asset, any mortgage,
lien (including mechanics, warehousemen, laborers and landlords liens), claim,
pledge, charge, security interest, preemptive right, right of first refusal,
option, judgment, title defect, or encumbrance of any kind in respect of or
affecting such Asset.
-11-
<PAGE> 12
"PERSON" or "PERSON" shall mean an individual, corporation,
partnership, joint venture, association, trust, unincorporated organization or
other entity, including a government or political subdivision or an agency or
instrumentality thereof.
"RECEIVABLES" shall mean as of any date any trade accounts
receivable, notes receivable, rights to payments of cash, right to payments of
stock, options, warrants and/or other non-cash payments, and other miscellaneous
receivables of the Company arising in the ordinary course of the Business.
"REGULATORY ACTIONS" shall mean any claim, demand, action,
suit or proceeding brought or instigated by any Governmental Body in connection
with any Environmental Law, Including, without limitation, civil, criminal
and/or administrative proceedings, whether or not seeking costs, damages,
penalties or expenses.
"TAX" (including, with correlative meaning, the terms "Taxes"
and "Taxable") shall mean (i) any net income, gross income, gross receipts,
sales, use, ad valorem, transfer, transfer gains, franchise, profits, license,
withholding, payroll, employment, excise, severance, stamp, rent, recording,
occupation, premium, real or personal property, intangibles, environmental or
windfall profits tax, alternative or add-on minimum tax, customs duty or other
tax, fee, duty, levy, impost, assessment or charge of any kind whatsoever
(including but not limited to taxes assessed to real property and water and
sewer rents relating thereto), together with any interest and any penalty,
addition to tax or additional amount imposed by any Governmental Body (domestic
or foreign) (a "Tax Authority") responsible for the imposition of any such tax,
with respect to the Company, the Business or the Assets (or the transfer thereof
or of the Merger); (ii) any liability for the payment of any amount of the type
described in the immediately preceding clause (i) as a result of the Company
being a member of an affiliated or combined group with any other corporation at
any time on or prior to the Closing Date and (iii) any liability of the Company
for the payment of any amounts of the type described in the immediately
preceding clause (i) as a result of a contractual obligation to indemnify any
other person.
"TAX LIABILITIES" shall mean any and all Liabilities for Taxes
(other than Tax Liabilities arising out of the Contemplated Transactions that
are payable by the Purchaser hereunder) that are payable by the Company pursuant
to the terms of this Agreement or pursuant to Law or that are payable by the
Company arising out of events, transactions, facts or circumstances occurring or
existing on or prior to the Closing Date.
"TAX RETURN" shall mean any return or report (including
elections, declarations, disclosures, schedules, estimates and information
returns) required to be supplied to any Tax Authority.
"TRANSACTION DOCUMENTS" shall mean, collectively, this
Agreement, and each of the other agreements and instruments to be executed and
delivered by all or some of the parties hereto in connection with the
consummation of the transactions contemplated hereby.
SECTION 8.2 INTERPRETATION. Unless the context otherwise requires, the
terms defined in Section 8.1 shall have the meanings herein specified for all
purposes of this Agreement, applicable to both the singular and plural forms of
any of the terms defined herein. All accounting terms defined in Section 8.1,
and those accounting terms used in this Agreement not defined in Section 8.1,
except as otherwise expressly provided herein, shall have the meanings
customarily given thereto in accordance with GAAP. When a reference is made in
this Agreement to Sections, such reference shall be to a Section of this
Agreement unless otherwise indicated. The headings contained in this Agreement
are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Whenever the words "include", "includes" or
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<PAGE> 13
"including" are used in this Agreement, they shall be deemed to be followed by
the words "without limitation."
IN WITNESS WHEREOF, this Agreement has been duly executed as of the
date first written above.
THE COMPANY:
Attest: PEACHTREE FIBEROPTICS, INC.
By: By: /s/ Leonard Sokolow
-------------------------------- ------------------------------
Title: Title: CEO
/s/ Steven Jacobs
------------------------------
Steven C. Jacobs
/s/ Mauricio Borgonovo
------------------------------
Mauricio Borgonovo
-13-
<PAGE> 1
EXHIBIT 10.10
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (the "Agreement") dated as of January 3,
2000 by and among Steven C. Jacobs ("Jacobs") and Mauricio Borgonovo
("Borgonovo") ("Sellers") and Peachtree FiberOptics, Inc., a Delaware
corporation ("Purchaser").
ARTICLE 1.
PURCHASE AND SALE OF ASSETS
SECTION 1.1 PURCHASE AND SALE. On the Closing Date (as hereinafter
defined), Sellers shall sell, convey, transfer, assign and deliver to Purchaser,
by appropriate instruments in a form satisfactory to Purchaser, and Purchaser
shall purchase and accept, for the consideration hereinafter provided, the
assets listed on Exhibit A attached hereto.
SECTION 1.2 PURCHASE PRICE.
(a) The aggregate purchase price (the "Purchase Price") of the
Assets shall be:
Each Seller will be issued a warrant (collectively, the
"Warrant") with each Warrant giving the holder the right to purchase 95,000
shares of Purchaser's common stock, exercisable for a period of five years
following the Closing Date (defined below) at an exercise price of $2.50 per
share, pursuant to the form of Warrant Certificate attached hereto as Exhibit B.
ARTICLE 2.
CLOSING
SECTION 2.1 THE CLOSING. The consummation of the transactions
contemplated by this Agreement (the "Closing") shall take place on January 3,
2000 at the offices of Cohen, Berke, Bernstein, Brodie & Kondell, P.A., 2601
South Bayshore Drive, Suite 1900, Miami, Florida 33133 with the execution of
this Agreement. The date of the Closing shall be referred to as the "Closing
Date".
SECTION 2.2 DELIVERIES AT CLOSING. At the Closing:
(b) There shall be delivered to the Sellers;
(i) The Warrants.
(c) There shall be delivered to Purchaser:
(i) The Bill of Sale and General Assignment
Agreement in the form attached hereto as Exhibits C and D, respectively.
ARTICLE 3.
REPRESENTATIONS AND WARRANTIES OF THE SELLERS
Sellers represent and warrant to Purchaser as follows:
SECTION 3.1 NO CONFLICTS, CONSENTS. The execution, delivery and
performance by the Sellers of this Agreement will not violate, conflict with or
result in a breach or default under (after the giving of notice or the passage
<PAGE> 2
of time or both), or permit the termination of, any contract to which either of
them is a party or by which it or any of the Assets may be bound or subject, or
result in the creation of any lien upon any of the Assets.
SECTION 3.2 TITLE. Sellers have good and marketable title to all of
the Assets, free and clear of all liens. The Assets are in good condition and
repair (subject to normal wear and tear).
SECTION 3.3 CONTRACTS.
(a) True and complete copies of all contracts constituting
part of the Assets have been delivered to Purchaser.
(b) All such contracts are valid, existing, in full force and
effect and, to the knowledge of the Sellers, the other parties thereto in
accordance with their terms.
ARTICLE 4.
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser makes the following representations and warranties to the
Sellers:
SECTION 4.1 ORGANIZATION AND GOOD STANDING. Purchaser is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Florida and is duly qualified to do business in all states where its
activities make such qualification necessary.
SECTION 4.2 AUTHORITY. Purchaser has full power and has taken all
corporate action necessary to execute, deliver and perform this Agreement and to
carry out the transactions contemplated hereby. The execution, delivery and
performance of the obligations of Purchaser under this Agreement has been, or
will be on the Closing Date, duly and effectively authorized by Purchaser's
Board of Directors and no further corporate authority therefor or approval
thereof is required by law.
SECTION 4.3 CONFLICTS. The execution, delivery and performance of this
Agreement shall not conflict with or result in the breach or violation of the
Purchaser's Articles of Incorporation, By-Laws or any contract, agreement,
lease, commitment, license, permit, authorization or concession to which it is a
party or by which it is bound, or any statute, rule, regulation, ordinance,
code, order, judgment, writ, injunction, decree or award of any court or
administrative or governmental body, or constitute an event which with notice,
lapse of time, or both, would result in any such breach, or violation and which
would have a material adverse effect on the Purchaser.
ARTICLE 5.
MISCELLANEOUS PROVISIONS
SECTION 5.1 NO ASSIGNMENT. This Agreement may not be assigned by either
party without the prior written consent of the other party.
SECTION 5.2 GOVERNING LAW. This Agreement is deemed to have been made
in the State of Florida and its interpretations, its construction and the
remedies for its enforcement or breach are to be applied pursuant to, and in
accordance with, the laws of the State of Florida for contracts made and to be
performed in that State.
SECTION 5.3 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which taken together shall be deemed one original.
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<PAGE> 3
IN WITNESS WHEREOF, this Agreement has been duly executed as of the
date first written above.
PURCHASER:
PEACHTREE FIBEROPTICS, INC., a Delaware
corporation
By: /S/ leonard Sokolow
-------------------------------------
Title: CEO
-----------------------------------
SELLERS:
/s/ Steven Jacobs
----------------------------------------
Steven C. Jacobs
/s/ Mauricio Borgonovo
----------------------------------------
Mauricio Borgonovo
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<PAGE> 1
EXHIBIT 10.11
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (the "Agreement") dated as of November
17, 1999 by and between Andrew Reckles ("Reckles"), Paul T. Mannion ("Mannion"),
and Vincent Sbarra ("Sbarra") (Reckles, Mannion and Sbarra may collectively be
referred to as "Members") and Peachtree FiberOptics, Inc., a Delaware
corporation ("Purchaser"). Definitions of capitalized terms used in Articles 1
through 7 herein which are not otherwise defined are set forth in Section 8.1.
W I T N E S S E T H:
WHEREAS, the Members are engaged in the capital finance and consulting
business as an unincorporated enterprise (the "Company") having operated
previously as a specialty finance group of First Atlanta Securities and prior to
that as the "JWGenesis Specialty Finance Group" and the Members are desirous of
selling certain of the business assets and assigning certain of its business
liabilities of the Company to Purchaser; and
WHEREAS, in reliance upon the representations, warranties and covenants
of the Company contained in this Agreement, Purchaser desires to acquire
substantially all of the assets of the Company.
NOW, THEREFORE, in consideration of the foregoing premises, and the
representations, warranties, covenants and agreements contained herein, and for
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties hereby agree as follows:
ARTICLE 1.
PURCHASE AND SALE OF ASSETS
SECTION 1.1 PURCHASE AND SALE. Subject to the provisions of this
Agreement, on the Closing Date (as hereinafter defined), the Company shall sell,
convey, transfer, assign and deliver to Purchaser, and Purchaser shall purchase
and accept, for the consideration hereinafter provided, the respective assets
and rights of the Company described herein (the "Assets"), wherever located and
whether or not shown on the books of account or other records of the Company,
specifically including, but without limitation, the following:
(a) EQUIPMENT. The equipment, machinery, furniture,
fixtures, materials, supplies, consumable items and other assets;
(b) RECEIVABLES. The receivables of the Company not
otherwise owned by the Members prior employer;
(c) MISCELLANEOUS ASSETS. All right title and interest in
and to the tangible and intangible assets of the Company generally described
below (the "Miscellaneous Assets") wherever located and whether or not on the
books of account or other records. including, without limitation:
(i) all assets currently used by the Members in
operating the Company except assets in the personal name of the Members and/or
their spouses;
(ii) equipment leasehold deposits;
<PAGE> 2
(iii) all patents, technical processes,
compilations, formulations, formulas, strategies, analytic data and models,
and/or other such information developed or used by the Company, or which the
Company has a right to use, and all know-how and trade secrets which are owned
by third parties in which the Company has any interest by license or otherwise,
and all processes, marketing procedures, formulae, supplier, referral, business
source and customer lists and files and records of the Company, all lists of
potential customers, suppliers, referrals and business sources, all data bases
relating to customers, suppliers, referrals and business sources and all other
data of any kind or nature on any and all media, product and sales literature of
the Company, all software owned by the Company and all rights, authority and
privileges enjoyed by the Company in connection with any and all software owned
by third parties, all trade names, trademarks, service marks, copyrights, trade
dress (whether registered or at common law), including, without limitation, the
names "Vcapitalmarkets.com, Vcapitalmarkets.net, Vcorporatefinance.com,
Vcorporatefinance.net" (collectively hereinafter referred to as "Intellectual
Property");
(iv) all trade and/or other accounts receivable,
rights to payments and other non-cash consideration payable to the Company other
than those owned by the Member's former employer and all other notes receivable,
miscellaneous accounts and installment contracts;
(v) by Purchaser at its sole discretion on or
before or after Closing, the real estate lease associated with the current
offices of the Company;
(vi) copies of all books and records, wherever
located, all customer, referral and supplier lists or lists of potential
customers, referring parties or suppliers, trade secrets, business source,
technical information, product and sales literature, deposits, prepayments and
other credits, if any, of the Business;
(vii) unless rejected by Purchaser at its sole and
absolute discretion at any time on or before or after Closing, all insurance
policies owned or possessed by the Company;
(viii) the exclusive use of the names
"Vcapitalmarkets.com, Vcapitalmarkets.net, Vcorporatefinance.com,
Vcorporatefinance.net" and all other trade names of the Company;
(ix) all licenses, permits, approvals and all
applications therefor of the Company with all Governmental Bodies and other
regulatory authorities relating to the Company;
(x) all interests and rights of the Company to
enforce all Contractual Rights and to obtain injunctive relief and damages with
respect to any and all confidentiality and non-competitive agreements and
restrictive covenants against any party; and
(xi) any and all other assets, properties,
business and goodwill of the Company of any kind, character and description,
whether tangible or intangible, real, personal or mixed, and wherever located or
by whomever possessed, including, but not limited to: telephone numbers and
listings, maintenance operations, rights and claims to refunds, prepaid
expenses, customer deposits, deposits by the Company with any other person,
policies and procedures, discounts and adjustments of every kind, express or
implied warranties, and all information and records (including, without
limitation, personnel records to the extent not prohibited by law) acquired for,
used in or in any way related to the Business.
The sale of the Assets shall be made free and clear of all liabilities
and obligations of any kind or nature. Purchaser shall not assume any
liabilities or obligations whatsoever of the Company. All obligations and
liabilities of the Company, whether existing or hereafter arising, shall remain
the sole responsibility of the Members (hereinafter referred to as "Retained
Liabilities"). Purchaser shall have no responsibility or obligation whatsoever
for any Retained Liabilities or any other liabilities relating to, arising out
of or in connection therewith.
2
<PAGE> 3
SECTION 1.2 PURCHASE PRICE.
(a) The aggregate purchase price (the "Purchase Price") of the
Assets shall be 773,500 shares of the Purchasers common stock (the "Shares")
payable at Closing and they are the only shares common shares of the Purchaser
referenced in the Employment Agreements and Schedules thereto by and between the
Members and the Purchaser dated as of the date of this Agreement (collectively,
the "Employment Agreements"). The Shares shall be subject to escrow and
divestment pursuant to Paragraph 4 (b) and other applicable terms and conditions
of the Employment Agreements.
(b) The Shares referenced herein above shall be allocated to the
Members with such allocation described in Paragraph 4 (b) of the respective
Employment Agreements as follows:
(i) Paul Mannion: 400,000 Shares
(ii) Andy Reckles 300,000 Shares
(iii) Vince Sbarra: 73,500 Shares
ARTICLE 2.
CLOSING
SECTION 2.1 THE CLOSING. The consummation of the transactions contemplated by
this Agreement (the "Closing") shall take place simultaneous at the offices of
the Purchaser. The date of the Closing shall be referred to as the "Closing
Date".
SECTION 2.2 DELIVERIES AT CLOSING. At the Closing:
(a) There shall be delivered to the Company;
(i) Employment Agreements executed by Purchaser and each
of Mannion, Reckles and Sbarra, respectively;
(ii) Stock Option Agreements executed by Purchaser and
each of Mannion, Reckles and Sbarra, respectively;
(b) There shall be delivered to Purchaser:
(i) Employment Agreements executed by Mannion, Reckles
and Sbarra, respectively;
(ii) Stock Option Agreement executed by Mannion, Reckles
and Sbarra, respectively;
(iii) All written consents and approvals necessary or
required to transfer all of the Assets and to consummate the transactions
contemplated hereby in form reasonably satisfactory to Purchaser's counsel;
3
<PAGE> 4
ARTICLE 3.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company, Mannion, Reckles and Sbarra jointly and severally
represent and warrant to Purchaser as follows:
SECTION 3.1 AUTHORITY RELATIVE TO THIS AGREEMENT. The Members have full
power, capacity and authority to execute and deliver this Agreement and each
other Transaction Document to which it is a party and to consummate the
transactions contemplated hereby and thereby (the "Contemplated Transactions").
The execution and delivery of this Agreement and the consummation of the
Contemplated Transactions to which the Company is a party have been duly and
validly authorized by the Company and no other proceedings on the part of the
Company (or any other person) are necessary to authorize the execution and
delivery by the Company of this Agreement or the consummation of the
Contemplated Transactions to which the Company is a party. This Agreement and
the other Transaction Documents to which the Company is a party have been duly
and validly executed and delivered by each of the Company and (assuming the
valid execution and delivery thereof by the other parties thereto) constitute
the legal, valid and binding agreements of the Company enforceable against the
Company in accordance with their respective terms.
SECTION 3.2 LIABILITIES. There has been (i) no material adverse change
in the Assets or Liabilities, or in the Business or condition of the Company,
financial or otherwise, or the result of operations of the Company, and (ii) no
change in the Assets or Liabilities or in the Business or condition of the
Company, financial or otherwise, or in the results of operations or prospects of
the Company, except in the ordinary course of business; and (iii) no factor or
condition exists or, to the Company's knowledge and belief, is contemplated or
threatened, which might cause such a change in the future.
SECTION 3.3 ABSENCE OF CERTAIN CHANGES. The Company has conducted the
Business in the ordinary course consistent with past practices and there has not
been: (a) any material adverse change in the Condition of the Business or any
event, occurrence or circumstance that could reasonably be expected to cause
such a material adverse change; (b) any transaction or Contract with respect to
the purchase, acquisition, lease, disposition or transfer of any Assets or to
any capital expenditure (in each case, other than in the ordinary course of the
Business in accordance with past practice), in excess of $5,000; (c) any change
in any method of accounting or accounting practice by the Company; (d) any
material adverse change in the relationships of the Company with its customers,
suppliers and vendors; or (e) except in the ordinary course of the Business,
consistent with past practice, any payment, directly or indirectly, of and
Liability before or after the same became due in accordance with its terms.
SECTION 3.4 PROPERTIES. The Company has good and marketable title to
all of the Assets, including, without limitation, personal property used in the
Business, free and clear of all Liens. The equipment and other tangible personal
property constituting a part of the Assets (whether owned or leased), are in
good condition and repair (subject to normal wear and tear) and are adequate in
quantity and quality for the operation of the Business as presently conducted.
SECTION 3.5 CONTRACTS.
Members have provided the Purchaser with an accurate and
complete list of all material Contracts to which the Company is a party or by
which it or its Assets are bound or subject. True and complete copies of all
written Contracts of the Company and summaries of the material provisions of all
oral Contracts so listed have been delivered to Purchaser.
4
<PAGE> 5
SECTION 3.6 INTANGIBLE PROPERTY. The Company has not been notified by
any third party that the Intellectual Property Rights infringe upon or conflict
with the rights or intellectual property of third parties. There are no
outstanding claims, liens, encumbrances, options, licenses or agreements of any
kind relating to the Intellectual Property Rights, nor is the Company bound by
or party to any options, licenses or agreements of any kind with respect to the
patents, trademarks, service marks, trade names, copyrights, trade secrets,
licenses, information, proprietary rights and processes of any other person or
entity. The Company has full title and ownership of all Intellectual Property
Rights without any conflict with or infringement of the rights of others. The
Company has not infringed or violated in any way any valid patent, trademark,
trade name or copyright of others, nor has the Company received any notice,
claim or protest respecting any such violation or infringement. At Closing, the
Purchaser will have sole right, title and interest in and to the Intellectual
Property Rights free and clear of any claims by any person.
SECTION 3.7 CLAIMS AND PROCEEDINGS. There are no outstanding Orders of
any Governmental Body against or involving the Company or the Business. There
are no actions, suits, claims or counterclaims or legal, administrative or
arbitral proceedings or investigations (collectively, "Claims") (whether in
respect thereof are covered by insurance), pending or, to the knowledge of the
Company, threatened on the date hereof, against or involving the Company, any of
the Company's Assets or the Business.
SECTION 3.8 COMPLIANCE WITH LAWS. The Company is not in violation of
any order, judgment, injunction, award, citation, decree, consent decree or writ
applicable to the Company (collectively, "Orders"), or any law, statute, code,
ordinance, rule, regulation or other requirement (collectively, "Laws"), of any
government or political subdivision thereof, whether federal, state, local or
foreign, or any agency or instrumentality of any such government or political
subdivision, or any court or arbitrator (collectively, "Governmental Bodies")
affecting its Assets or the Business.
SECTION 3.9 FINDERS FEES. There is no investment banker, broker, finder
or other intermediary which has been retained by or is authorized to act on
behalf of the Company who might be entitled to any fee or commission from the
Company upon consummation of the Contemplated Transactions.
SECTION 3.10 APPROVALS. The Members and managers of the Company have
(i) determined that the Contemplated Transactions are fair to and in the best
interests of the Company and the Members, (ii) approved the Contemplated
Transactions, and (iii) resolved to execute and deliver this Agreement.
SECTION 3.11 ACCURACY OF INFORMATION. No representation, statement or
information made or furnished by the Members to Purchaser, in this Agreement,
the Transaction Documents and the schedules hereto and thereto contains, or
shall contain, any untrue statement of fact or omits or shall omit any fact
necessary to make the information contained in such representation, or
information not misleading, and, there are no obligations, contingent or
otherwise, of the Company that are not disclosed herein or in any schedule to
this Agreement.
ARTICLE 4.
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser makes the following representations and warranties to the
Company, Mannion, Reckles and Sbarra:
SECTION 4.1 ORGANIZATION AND GOOD STANDING. Purchaser is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Florida and is duly qualified to do business in all states where its
activities make such qualification necessary.
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SECTION 4.2 AUTHORITY. Purchaser has full power and has taken all
corporate action necessary to execute, deliver and perform this Agreement and to
carry out the transactions contemplated hereby. The execution, delivery and
performance of the obligations of Purchaser under this Agreement has been, or
will be on the Closing Date, duly and effectively authorized by Purchaser's
Board of Directors and no further corporate authority therefor or approval
thereof is required by law.
SECTION 4.3 CONFLICTS. The execution, delivery and performance of this
Agreement shall not conflict with or result in the breach or violation of the
Purchaser's Articles of Incorporation, By-Laws or any contract, agreement,
lease, commitment, license, permit, authorization or concession to which it is a
party or by which it is bound, or any statute, rule, regulation, ordinance,
code, order, judgment, writ, injunction, decree or award of any court or
administrative or governmental body, or constitute an event which with notice,
lapse of time, or both, would result in any such breach, or violation and which
would have a material adverse effect on the Purchaser.
SECTION 4.4 CHARTER DOCUMENTS AND CORPORATE RECORDS. The Company has
heretofore delivered to Purchaser true and complete copies of the Articles of
Incorporation and Bylaws, as in effect on the date hereof.
ARTICLE 5.
CONDITIONS PRECEDENT TO CLOSING
SECTION 5.1 CONDITIONS TO THE OBLIGATIONS OF THE COMPANY. All
obligations of the Company hereunder are subject, at the option of the Company,
to the fulfillment prior to or at the Closing of each of the following
conditions:
(a) PERFORMANCE. Purchaser shall have performed and complied
in all material respects with all agreements, obligations and covenants required
by this Agreement to be performed or complied with by it at or nor to the
Closing Date.
SECTION 5.2 CONDITIONS TO THE OBLIGATIONS OF PURCHASER. All obligations
of Purchaser hereunder are subject, at the option of Purchaser, to the
fulfillment prior to or at the Closing of each of the following further
conditions,
(a) PERFORMANCE. The Company shall have performed and complied
in all respects with all agreements, obligations and covenants required by this
Agreement to be performed or complied with by it or him at or prior to the
Closing Date.
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ARTICLE 6.
SURVIVAL
SECTION 6.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES.
(a) Notwithstanding any right of Purchaser fully to
investigate the affairs of the Company and notwithstanding any knowledge of
facts determined or determinable by Purchaser pursuant to such investigation or
right of investigation, Purchaser has the right to rely fully upon the
representations, warranties, covenants and agreements of Mannion, Reckles and
Sbarra contained in this Agreement, or listed or disclosed on any Schedule
hereto or in any instrument delivered in connection with or pursuant to any of
the foregoing. All such representations, warranties, covenants and agreements
shall survive the execution and delivery of this Agreement and the Closing
hereunder.
(b) All representations, warranties, covenants and agreements
of Purchaser shall survive the execution and delivery of this Agreement and the
Closing hereunder.
ARTICLE 7.
MISCELLANEOUS PROVISIONS
SECTION 7.1 NOTICES. All notices which are permitted or required under
this Agreement shall be in writing and delivered by hand, by verified overnight
delivery, or by certified mail, postage prepaid, addressed as follows, or to
such other person or address as may be designated by written notice by one party
to the other parties:
If to Purchaser: Peachtree Fiberoptics, Inc.
3300 PGA Boulevard, Suite 810
Palm Beach Gardens, Florida 33410
Attention: President
With a copy to: Richard N. Bernstein, Esq.
Cohen, Berke, Bernstein,
Brodie & Kondell, P.A.
Terremark Centre, 19th Floor
2601 South Bayshore Drive
Miami, Florida 33133
If to the Members: At the address provided under their respective
Employment Agreements
Notices shall be deemed delivered when delivered by the carrier as provided
above, as determined by the carrier receipt and/or confirmation of delivery
notice. The addresses set forth above shall be conclusive for all purposes
unless and until written notice of a change of address shall be sent to the
parties herein.
SECTION 7.2 OFFSET. Notwithstanding anything contained herein to the
contrary and in addition to, without limiting any of Purchaser's other rights
and remedies hereunder, Purchaser may, at its option, deduct, withhold and/or
otherwise offset the sum of any and all Losses from or against any payments due
or payable to an Indemnifying Party hereunder or otherwise in the event of any
Losses incurred by Purchaser for breach of this Agreement by the Members.
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SECTION 7.3 NO ASSIGNMENT. This Agreement may not be assigned by either
party without the prior written consent of the other party.
SECTION 7.4 SEVERABILITY. Any provision of this Agreement which is
invalid or unenforceable shall be ineffective to the extent of such invalidity
or unenforceability, without affecting in any way the remaining provision
hereof.
SECTION 7.5 GOVERNING LAW. This Agreement is deemed to have been made
in the State of Florida and its interpretations, its construction and the
remedies for its enforcement or breach are to be applied pursuant to, and in
accordance with, the laws of the State of Florida for contracts made and to be
performed in that State.
SECTION 7.6 SCHEDULES. It is acknowledged and agreed that all exhibits
and schedules to this Agreement are an integral part hereof and are
incorporated, in total, by reference fully as a part of this Agreement in all
respects.
SECTION 7.7 INCORPORATION AND AMENDMENT. This writing constitutes the
entire Agreement of the parties superseding and extinguishing all prior
agreements or understandings, representations or warranties, relating to the
subject matter hereof. This Agreement may not be modified, amended or terminated
except by written agreement specifically referring to this Agreement signed by
the parties hereto.
SECTION 7.8 REMEDIES. Each of the parties hereto agrees that any
dispute arising among the parties hereto shall be settled by a court of
competent jurisdiction in accordance with applicable law and that the parties
shall be free to petition the court for all appropriate legal and/or equitable
remedies inclusive of specific performance and injunctive relief.
SECTION 7.9 WAIVER. No waiver of any breach or default hereunder shall
be considered valid unless in writing and signed by the party giving such
waiver, and no such waiver shall be deemed a waiver of any subsequent breach or
default of the same or similar nature.
SECTION 7.10 HEADINGS. The paragraph headings contained herein are for
the purpose of convenience only and are not intended to define or limit the
contents of said paragraphs.
SECTION 7.11 FURTHER ACTION. Each party hereto shall take such further
action and shall execute and deliver such further documents as may be reasonably
requested by the other party in order to carry out the provisions and purposes
of this Agreement.
SECTION 7.12 COUNTERPARTS. This Agreement may be executed in one or
more counterparts, all of which taken together shall be deemed one original.
SECTION 7.13 VENUE. The parties hereto mutually agree that proper venue
with respect to any dispute arising hereunder, related hereto and connected
herewith shall be Broward County, Florida.
SECTION 7.14 NO THIRD-PARTY BENEFICIARY. Except as otherwise provided
herein, nothing expressed or implied in this Agreement is intended, or shall be
construed, to confer upon or give any person other than the parties hereto and
their respective heirs and permitted successors or assigns hereunder any rights
or remedies under or by reason of this Agreement.
SECTION 7.15 REMEDIES CUMULATIVE. No remedy made available by any of
the provisions of this Agreement is intended to be exclusive of any other
remedy, each and every remedy shall be cumulative and shall be in addition to
every other remedy given hereunder or now or hereafter existing at law or in
equity.
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SECTION 7.16 PUBLIC ANNOUNCEMENTS. Neither party shall, without prior
written consent from the other, issue any press release or furnish any written
statement to its employees or to the public concerning the transactions
contemplated by this Agreement.
ARTICLE 8.
DEFINITIONS
SECTION 8.1 DEFINITIONS. The following terms, as used herein, have the
following meanings:
"AFFILIATE" of any person means any other person directly or
indirectly through one or more intermediary persons, controlling, controlled by
or under common control with such person.
"BUSINESS" shall mean the ownership and operation of the
Assets comprising the business operations of the Company.
"CONTRACT" shall mean any contract, agreement, indenture,
note, bond, lease, conditional sale contract, mortgage, license, franchise,
instrument, commitment or other binding, arrangement, whether written or oral.
The term "KNOWLEDGE" with respect to (a) any individual shall
mean actual knowledge and (b) any entity shall mean the actual knowledge of the
directors and the executive officers of such entity; and "KNOWS" has a
correlative meaning.
"LIABILITY" shall mean any direct or indirect indebtedness,
liability, assessment, claim. loss, damage, deficiency, obligation or
responsibility, fixed or unfixed, choate or inchoate. liquidated or
unliquidated, secured or unsecured, accrued, absolute, actual or potential,
contingent or otherwise (including any liability under any guaranties, letters
of credit, performance credits or with respect to insurance loss accruals).
"LIEN" shall mean, with respect to any Asset, any mortgage,
lien (including mechanics, warehousemen, laborers and landlords liens), claim,
pledge, charge, security interest, preemptive right, right of first refusal,
option, judgment, title defect, or encumbrance of any kind in respect of or
affecting such Asset.
"PERSON" or "PERSON" shall mean an individual, corporation,
partnership, joint venture, association, trust, unincorporated organization or
other entity, including a government or political subdivision or an agency or
instrumentality thereof.
"REGULATORY ACTIONS" shall mean any claim, demand, action,
suit or proceeding brought or instigated by any Governmental Body in connection
with any Environmental Law, Including, without limitation, civil, criminal
and/or administrative proceedings, whether or not seeking costs, damages,
penalties or expenses.
"TRANSACTION DOCUMENTS" shall mean, collectively, this
Agreement, and each of the other agreements and instruments to be executed and
delivered by all or some of the parties hereto in connection with the
consummation of the transactions contemplated hereby.
SECTION 8.2 INTERPRETATION. Unless the context otherwise requires, the
terms defined in Section 8.1 shall have the meanings herein specified for all
purposes of this Agreement, applicable to both the singular and plural forms of
any of the terms defined herein. When a reference is made in this Agreement to
Sections, such reference shall be to a Section of this Agreement unless
otherwise indicated. The headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement. Whenever the words "include", "includes" or "including" are used
in this Agreement, they shall be deemed to be followed by the words "without
limitation."
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IN WITNESS WHEREOF, this Agreement has been duly executed as of the
date first written above.
PURCHASER:
PEACHTREE FIBEROPTICS, INC., a Delaware
corporation
By: /s/ LENARD SOKOLOW
----------------------------------
Title: CEO
------------------------------
MEMBERS
/s/ PAUL T. MANNION
-------------------------------------
Paul T. Mannion
/s/ ANDREW RECKLES
-------------------------------------
Andrew Reckles
/s/ VINCENT SBARRA
-------------------------------------
Vincent Sbarra
<PAGE> 1
Exhibit 10.14
STOCK PURCHASE AGREEMENT
This Agreement is made and entered into on September 27, 1999 between
Peachtree FiberOptics, Inc. d/b/a vFinance.com, a Delaware corporation (the
"Seller"), and River Rapids LTD (the "Buyer").
RECITAL
The Seller desires to sell to the Buyer, and the Buyer desires to
purchase from the Seller (i) 100,000 shares (the "Shares" or "Common Shares") of
Seller's common stock, par value $.01 per share ("Common Stock"), and (ii) the
right (the "Option") to purchase an additional 900,000 shares of Common Stock
(the "Option Shares"), upon the terms and subject to the conditions contained
herein.
NOW, THEREFORE, the parties agree as follows:
ARTICLE I
PURCHASE AND SALE OF SHARES
1.1 SHARES TO BE ACQUIRED. Subject to the terms and conditions
contained herein, the Seller shall sell, assign, transfer, and convey to the
Buyer, free and clear of all pledges, liens, security interests, encumbrances,
or other restrictions arising from the Seller (except restrictions on resale
under state or federal securities laws), and the Buyer shall purchase from the
Seller (a) the Shares and (b) the Option, the terms of which are set forth in
Section 1.2 hereof.
1.2 THE OPTION. The Buyer has the right to exercise the Option to
purchase all but not less than all of the Option Shares, commencing on the
"Funding", as defined herein below, and terminating at 5:00 P.M. (Miami, Florida
time) on September 27, 2002 (the "Exercise Period"). The exercise price of the
Option is (the "Option Exercise Price") is a follows:
300,000 common shares of Seller at $3.00 per share;
300,000 common shares of Seller at $4.00 per share; and
300,000 common shares of Seller at $5.00 per share
For purposes of this Agreement "Funding" shall be defined as the date upon which
Seller: (i) has sold substantially all its business or otherwise merged with or
been acquired by a third party; or (ii) has received on a cumulative basis net
proceeds (net of cash commissions) from the sale of its capital stock (excluding
the Shares purchased pursuant to Section 1.1) equal to or greater than
$5,000,000 including any capital transaction, or series of capital transactions,
from any source whatsoever. For purposes of this Agreement, the merger of
vFinance Holdings, Inc. (vFinance.com) and/or Union Atlantic LC into Seller
shall not be considered a "Funding". In the event there is no Funding by Seller
within 90 days from the date of this Agreement, the Exercise Period shall
terminate immediately and the Option shall be cancelled and shall deemed null
and void and of no further force and effect. In order to exercise the Option,
the Option Exercise Price must be paid in full by wire transfer of immediately
available funds to a bank designated by the Seller during the Exercise Period.
The Seller hereby represents that the Option Shares will be free and clear of
all pledges, liens, security interests, encumbrances or other restrictions
arising from the Seller (except restrictions on resale under state or federal
securities laws). Upon exercise of the Option and payment of the Option Exercise
Price, the Seller shall deliver to the Buyer a certificate representing the
Option Shares. The Option Shares shall be issued in the name of River Rapids
LTD.
1.3 CLOSING. The closing of the purchase and sale of the Shares (the
"Closing") shall occur simultaneously with the execution of this Agreement by
the parties hereto.
1.4 DELIVERY OF THE SHARES. On the date of the Closing, the Seller and
Buyer agree that the Seller shall
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deliver to the Buyer a certificate representing the Shares, issued in the name
of the Hare & Co., and the Buyer shall deliver the purchase price for the Shares
set forth in Article II hereof.
1.5 REGISTRATION RIGHTS. The Buyer shall have piggyback registration
rights with respect to the Shares and the Options Shares (collectively, "Common
Shares") a described in Section 5.9 of this Agreement.
ARTICLE II
PURCHASE PRICE AND PAYMENT
The aggregate purchase price for the Shares shall be $250,000. Such
purchase price shall be payable on the date of the Closing by wire transfer of
immediately available funds to a bank designated by the Seller.
ARTICLE III
REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE SELLER
As an inducement to the Buyer to enter into this Agreement and to
consummate the transactions contemplated hereby, the Seller represents, warrants
and covenants as follows:
3.1 CAPITALIZATION; VALIDITY OF SHARES. The Seller has authorized
capital stock consisting of 20,000,000 shares of Common Stock and shares of
preferred stock, par value $.01 per share, of which 496,334 shares of Common
Stock are issued and outstanding prior to the execution of this Agreement and no
shares of preferred stock are issued and outstanding. All of the issued and
outstanding shares of Common Stock are duly and validly authorized and issued,
fully paid and non-assessable, were offered, issued, and sold in accordance with
applicable federal and state securities laws and were not issued in violation of
the preemptive rights of any stockholders of the Seller. The Shares and the
Option Shares to be issued and delivered to the Buyer in accordance with the
terms contained herein, when so issued and delivered, will be duly and validly
authorized and issued, fully paid and non-assessable, free and clear of any
security interest, lien, encumbrance, right, or restriction whatsoever arising
from the Seller (except restrictions on resale under state or federal securities
laws). The Seller has entered into Letters of Intent to merge into it vFinance
Holdings, Inc. (vFinance.com) and Union Atlantic LC. It is anticipated that post
merger there will be approximately 8,000,000 shares issued and outstanding. The
Seller also anticipates entering into a Stock Option Plan (the "Plan") with a
minimum of 1,000,000 shares of Common Stock authorized for issuance under the
Plan.
3.2 ORGANIZATION AND GOOD STANDING. The Seller is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware.
3.3 AUTHORIZATION; VALIDITY. The Seller has full corporate power and
authority to enter into this Agreement and to perform all of the Seller's
undertakings herein set forth, including, without limitation, the full corporate
power and authority to issue the Shares and the Option Shares to the Buyer free
and clear of any security interest, liens, encumbrances, rights, or restrictions
arising from the Seller. The execution of this Agreement and the consummation of
the transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of the Seller. This Agreement is the legal, valid,
and binding obligation of the Seller, enforceable in accordance with its terms,
except as such enforcement may be limited by applicable bankruptcy, insolvency,
moratorium, or similar laws affecting the enforcement of creditors' rights
generally, and except as enforcement of any particular remedy may be limited by
the application of equitable principles. Neither the execution and delivery of
this Agreement nor the consummation of the transactions contemplated hereby will
(a) violate the Articles of Incorporation or Bylaws of the Seller; (b) violate
or constitute a default under any provision of, or conflict with, or result in
the acceleration of any obligation under, any mortgage, deed of trust, note,
loan, lease, or agreement to which the Seller is a party or by which it or any
of its properties or assets may be bound, which violation, default, or conflict
would result in a material adverse effect on the business, assets, operations,
or condition of the Seller; or (c) violate any order, ruling, decree, judgment,
arbitration award, or stipulation to which the Seller is subject, which
violation would result in a material adverse effect on the business, assets,
operations or condition of the Seller.
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<PAGE> 3
ARTICLE IV
REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE BUYER
As an inducement to the Seller to enter into this Agreement and to
consummate the transactions contemplated hereby, the Buyer represents, warrants
and covenants as follows:
4.1 STATUS OF SHARES AND OPTION SHARES. The Buyer understands that he
must bear the economic risk of the purchase of the Shares and the Option Shares
for an indefinite period of time because: (a) neither the Shares nor the Option
Shares has been registered under the Securities Act of 1933 (the "1933 Act") and
applicable state securities laws; (b) the Seller neither has an obligation to
register a sale of the Shares or the Option Shares nor has the Seller agreed to
do so in the future; (c) the exemption provided by Rule 144 under the 1933 Act
is not presently available for the resale of the Shares, the Option or the
Option Shares, and it is unlikely that such exemption will be available at any
time in the future with respect to any proposed transfer of the Shares, the
Option or the Option Shares, and (d) Seller is under no obligation to perfect
any exemption for resale of any one of such securities.
4.2 FLORIDA TRANSACTION. The Buyer first learned of the offering
contemplated herein in the State of Florida and received all information
relating to the offering and the Seller in the State of Florida and intends that
no state securities laws, other than those of the State of Florida, shall govern
this transaction.
4.3 RISK OF LOSS. The Buyer understands the highly speculative nature
of the risks involved in the proposed investment and that the Seller may not
prove to be a successful business. The Buyer can bear the economic risk of
losing his entire investment in such securities. The Buyer has such knowledge
and experience in financial and business matters so as to be capable of
evaluating the merits and risks of an investment in the Shares, the Option and
the Option Shares.
4.4 INFORMATION. The Buyer has been afforded prior to entering into
this transaction, the opportunity to ask questions of, and received answers
from, the Seller and to obtain any information necessary or desirable in order
for the Buyer to make an informed investment decision with respect to entering
into this transaction.
4.5 ACCREDITED INVESTOR. The Buyer is an "accredited investor" as
defined in Rule 501 of Regulation D under the 1933 Act.
4.6 RESALE RESTRICTIONS. The Shares and the Option Shares (if the
Option is exercised) are and will be acquired by the Buyer not with a view to
any distribution or resale thereof in any transaction which would be in
violation of the 1933 Act, and the rules promulgated thereunder, or any state
securities statute.
4.7 SECURITIES NOT REGISTERED. The Buyer understands that the Shares
and the Option Shares have not and will not be registered under the 1933 Act or
any state securities laws, and that he must therefore bear the economic risk of
such investment indefinitely, unless a subsequent disposition thereof is
registered under the 1933 Act or is exempt from registration, and that the
Shares and the Option Shares will bear the following legend:
"The shares represented by this certificate have not been
registered under the Securities Act of 1933 or under any other
applicable securities laws and may not be sold, transferred,
pledged, encumbered in any way or otherwise disposed of except
pursuant to the Securities Act of 1933, the securities laws of
any applicable jurisdiction, and the rules and regulations
promulgated under the Securities Act of 1933 and any other
applicable jurisdiction's laws."
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<PAGE> 4
ARTICLE V
MISCELLANEOUS PROVISIONS
5.1 NOTICES. All notices, requests, demands, and other communications
required or permitted hereunder shall be in writing and shall be deemed to have
been duly given if delivered by hand or by electronic transmission. If sent by
reliable over-night delivery service and addressed as follows, or at such other
addresses as the parties hereto may from time to time designate in writing, such
notices, requests, demands, and other communications shall be deemed delivered
the next business day after being so duly sent:
To Buyer: Trident Trust
12-14 Finch Road
Douglas, Isle of Man
Im199TT.
Attn: Gordon Mundy
Fax 011 441 624 620 588
To Seller: Peachtree FiberOptics, Inc.
2458 Provence Court
Weston, FL 33327
305-374-0282
Attn: Leoanrd J. Sokolow, President
5.2 PRIOR AGREEMENTS. This Agreement supersedes all prior discussions
and agreements between the Buyer and the Seller with respect to the purchase of
the Shares, the Option and the Option Shares and all other matters contained
herein, and this Agreement contains the sole and entire agreement between the
parties hereto with respect to the transactions contemplated herein.
5.3 MODIFICATIONS. This Agreement may be modified or amended only by a
written instrument executed by the parties hereto.
5.4 COUNTERPARTS, HEADINGS, ETC. This Agreement may be executed
simultaneously in any number of counterparts, each of which shall be deemed to
be an original, but all of which shall constitute one and the same instrument.
The headings herein are for convenience of reference only and shall not be
deemed part of this Agreement.
5.5 ASSIGNMENT. The rights and obligations of the parties to this
Agreement, including, but not limited to, the Option, are not assignable.
5.6 BINDING EFFECT. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto, their respective successors and
permitted assigns. No party hereto may assign its or his rights or obligations
hereunder without the express prior written consent of the other party hereto.
5.7 GOVERNING LAW. The validity and effect of this Agreement and the
rights and obligations of the parties hereto shall be governed by and construed
and enforced in accordance with the laws of the State of Florida.
5.8 SEVERABILITY. Whenever possible, each provision of this Agreement
will interpreted in such a manner as to be effective and valid under applicable
law, but if any provision of this Agreement is held to be prohibited by or
invalid under applicable law, such provision shall be ineffective only to the
extend of such prohibition or invalidity, without invalidating the remainder of
this Agreement.
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<PAGE> 5
5.9 PIGGY-BACK REGISTRATION RIGHTS.
(a) THE SELLER OBLIGATIONS.
i. REGISTRATION. If at any time after the date hereof
the Seller shall file with the Securities and Exchange Commission (the "SEC") a
registration statement (a "Registration Statement") under the Securities Act
relating to an offering for its own account or the account of others under the
Securities Act of any of its equity securities (other than on Form S-4 or Form
S-8 or their then equivalents relating to equity securities to be issued solely
in connection with any acquisition of any entity or business or equity
securities issuable in connection with stock option or other employee benefit
plans), the Seller shall send to Buyer written notice of such determination and,
if within fifteen (15) days after the date of such notice, Buyer shall so
request in writing, the Seller shall include in such Registration Statement all
or any part of the Common Shares Buyer requests to be registered, except that
if, in connection with any underwritten public offering, the managing
underwriter(s) thereof shall impose a limitation on the number of Common Shares
which may be included in the Registration Statement because, in such
underwriter(s)' judgment, marketing or other factors dictate such limitation is
necessary to facilitate public distribution, then the Seller shall be obligated
to include in such Registration Statement only such limited portion of the as
the underwriter shall permit (limited to zero if necessary). If an offering in
connection with which is entitled to registration under this Section 5.9(a)(i)
is an underwritten offering, then Buyer shall, unless otherwise agreed by the
Seller, offer and sell such Common Shares in an underwritten offering using the
same underwriter or underwriters and, subject to the provisions of this
Agreement, on the same terms and conditions as other Common Shares included in
such underwritten offering.
ii. AMENDMENTS AND SUPPLEMENTS; MAINTAIN
EFFECTIVENESS. The Seller shall prepare and file with the SEC such amendments
(including post-effective amendments) and supplements to the Registration
Statement and the prospectus used in connection with the Registration Statement
as may be necessary to keep the Registration Statement effective at all times
for a period of six (6) months following the effective date thereof (the
"Registration Period"), except during any Disclosure Delay Period (as defined in
Section 5.9(a)(iii)), and, during such period, comply with the provisions of the
Securities Act with respect to the disposition of all Common Shares covered by
the Registration Statement until such time as all of such Common Shares have
been disposed of in accordance with the intended methods of disposition by Buyer
thereof as set forth in the Registration Statement.
iii. DISCLOSURE DELAY PERIOD. If, at any time prior
to the expiration of the Registration Period, in the good faith reasonable
judgment of the Seller's Board of Directors, the disposition of Common Shares
would require the premature disclosure of material non-public information which
may reasonably be expected to have an adverse effect on the Seller, then the
Seller shall not be required to maintain the effectiveness of or amend or
supplement the Registration Statement for a period (a "Disclosure Delay Period")
expiring upon the earlier to occur of (A) the date on which such material
information is disclosed to the public or ceases to be material or (B) subject
to Section 5.9(a)(iv) hereof, up to ninety (5.90) calendar days after the date
on which the Seller provides a notice to Buyer under Section 5.9(a)(iv) hereof
stating that the failure to disclose such non-public information causes the
prospectus included in the Registration Statement, as then in effect, to include
an untrue statement of a material fact or to omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading.
iv. NOTICE OF DISCLOSURE DELAY PERIOD. The Seller
will give prompt written notice, to Buyer of each Disclosure Delay Period. Buyer
agrees that, upon receipt of such notice prior to Buyer's disposition of all
such Common Shares will forthwith discontinue disposition of such Common Shares
pursuant to the Registration Statement, and will not deliver any prospectus
forming a part thereof in connection with any sale of such Common Shares until
the expiration of such Disclosure Delay Period. Notwithstanding anything in this
Section 5.9 to the contrary, there shall not be more than an aggregate of One
Hundred Eighty (180) calendar days in any twelve (12) month period during which
the Seller is in a Disclosure Delay Period.
5
<PAGE> 6
v. COPIES OF FILINGS AND CORRESPONDENCE. The Seller
shall furnish to Buyer if its Common Shares are included for resale in the
Registration Statement (A) promptly after the same is prepared and publicly
distributed, filed with the SEC, or received by the Seller, one copy of the
Registration Statement and any amendment thereto, each preliminary prospectus
and prospectus and each amendment or supplement thereto, and each item of
correspondence from the SEC or the staff of the SEC which comments upon or
requests information relating to Buyer and/or the Common Shares (including,
without limitation, the resale and plan of distribution hereof), in each case
relating to such Registration Statement (other than any portion, if any, thereof
which contains information for which the Seller has sought confidential
treatment), (B) on the date of effectiveness of the Registration Statement or
any amendment thereto, a notice stating that the Registration Statement or
amendment has been declared effective, and (C) such number of copies of a
prospectus, including a preliminary prospectus, and all amendments and
supplements thereto and such other documents as such Buyer may reasonably
request in order to facilitate the disposition of the Common Shares by Buyer.
vi. BLUE SKY. The Seller shall use its best efforts
to (A) register and qualify the Common Shares covered by the Registration
Statement under such other securities or "blue sky" laws of such jurisdictions
in the United States as Buyer reasonably requests, (B) prepare and file in those
jurisdictions such amendments (including post-effective amendments) and
supplements to such registrations and qualifications as may be necessary to
maintain the effectiveness thereof during the Registration Period, (C) take such
other actions as may be necessary to maintain such registrations and
qualifications in effect at all times during the Registration Period, and (D)
take all other actions reasonably necessary or advisable to qualify the Common
Shares for sale in such jurisdictions; PROVIDED, HOWEVER, that the Seller shall
not be required in connection therewith or as a condition thereto to (A) qualify
to do business in any jurisdiction where it would not otherwise be required to
qualify but for this Section 5.9(a)(vi), (B) subject itself to general taxation
in any such jurisdiction, (C) file a general consent to service of process in
any such jurisdiction, (D) provide any undertakings that cause the Seller undue
expense or burden, or (E) make any change in its charter or bylaws, which in
each case the Board of Directors of the Seller determines to be contrary to the
best interests of the Seller and its stockholders.
vii. EVENTS AFFECTING PROSPECTUS. As promptly as
practicable after becoming aware of such event, the Seller shall notify Buyer of
the happening of any event, of which the Seller has knowledge, as a result of
which the prospectus included in the Registration Statement, as then in effect,
includes an untrue statement of a material fact or omission to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading, and if such Registration Statement is supplemented or amended to
correct such untrue statement or omission, to deliver such number as Buyer may
reasonably request.
viii. NOTIFICATION OF AMENDMENT OR SUPPLEMENT. The
Seller shall, as promptly as practical after becoming aware of such event
described in Section 5.9(vii), notify Buyer of the issuance of such order and
the resolution thereof (and if such Registration Statement is supplemented or
amended, deliver such number of copies of such supplement or amendment to Buyer
as Buyer may reasonably request).
ix. REVIEW BY BUYER'S COUNSEL. The Seller shall
permit a single firm of counsel designated by Buyer to review the Registration
Statement and all amendments and supplements thereto a reasonable period of time
prior to their filing with the SEC.
x. BUYER'S DUE DILIGENCE; CONFIDENTIALITY OF THE
SELLER INFORMATION. The Seller shall make available for inspection by (A) Buyer,
(B) one firm of attorneys and one firm of accountants or other agents retained
by Buyer (collectively, the "Inspectors") all pertinent financial and other
records, and pertinent corporate documents and properties of the Seller
(collectively, the "Records"), as shall be reasonably deemed necessary by each
Inspector to enable each Inspector to exercise its due diligence responsibility,
and cause the Seller's officers, directors and employees to supply all
information which Buyer may reasonably request for purposes of such due
diligence; PROVIDED, HOWEVER, that each Inspector shall hold in confidence and
shall not make
6
<PAGE> 7
any disclosure (except to Buyer) of any Record or other information which the
Seller determines in good faith to be confidential, and of which determination
the Inspector so notified, unless (A) the disclosure of such Records is
necessary to avoid or correct a misstatement or omission in any Registration
Statement, (B) the release of such Records is ordered pursuant to a subpoena or
other order from a court or government body of competent jurisdiction, or (C)
the information in such Records has been made generally available to the public
other than by disclosure in violation of this or any other agreement. The Seller
shall not be required to disclose any confidential information in such Records
to any Inspector until and unless such Inspector shall have entered into a
confidentiality agreements with the Seller with respect thereto, substantially
in the form of this Section5.9(a)(x). Buyer agrees that it shall, upon learning
that disclosure of such Records is sought in or by a court or governmental body
of competent jurisdiction or through other means, give prompt notice to the
Seller and allow the Seller, at its expense, to undertake appropriate action to
prevent disclosure of, or to obtain a protective order for, the Records deemed
confidential. Nothing herein shall be deemed to limit Buyer's ability to sell
Common Shares in a manner which is otherwise consistent with applicable laws and
regulations.
xi. CONFIDENTIALITY OF BUYER INFORMATION. The Seller
shall hold in confidence and not make any disclosure of information concerning
Buyer provided to the Seller unless (A) disclosure of such information is
necessary to comply with federal or state securities laws, (B) the disclosure of
such information is necessary to avoid or correct a misstatement or omission in
any Registration Statement, (C) the release of such information is ordered
pursuant to a subpoena or other order from a court or governmental body of
competent jurisdiction, (D) such information has been made generally available
to the public other than by disclosure in violation of this or any other
agreement, or (E) Buyer consents to the form and content of any such disclosure.
The Seller agrees that it shall, upon learning that disclosure of such
information concerning Buyer is sought in or by a court or governmental body of
competent jurisdiction or through other means, give prompt notice to Buyer prior
to making such disclosure, and allow Buyer, at its expense, to undertake
appropriate action to prevent disclosure of, or to obtain a protective order
for, such information.
xii. COMPLIANCE WITH LAWS. The Seller shall comply
with all applicable laws related to a Registration Statement and offering and
sale of securities and all applicable rules and regulations of governmental
authorities in connection therewith (including, without limitation, the
Securities Act and the Securities Exchange Act of 15.934, as amended, and the
rules and regulations promulgated by the SEC.)
(b) OBLIGATIONS OF BUYER. In connection with a registration of
the Common Shares Buyer shall have the following obligations:
i. BUYER INFORMATION. It shall be a condition
precedent to the obligations of the Seller to complete the registration pursuant
to Section 5.9 that Buyer shall furnish to the Seller such information regarding
itself, the Common Shares and the intended method of disposition of the as shall
be required to effect the registration of such Registrable Securities and shall
execute such documents in connection with such registration as the Seller may
reasonably request. At least five (5) business days prior to the first
anticipated filing date of the Registration Statement, the Seller shall notify
Buyer of the information the Seller requires from Buyer.
ii. COOPERATION. Buyer, agrees to cooperate with the
Seller as requested by the Seller in connection with the preparation and filing
of the Registration Statement hereunder, unless Buyer does not include any of
the Common Shares in the Registration Statement.
iii. UNDERWRITTEN OFFERING. In the event Buyer
determines to engage the services of an underwriter, Buyer agrees to enter into
and perform its obligations under an underwriting agreement, in usual and
customary form, including, without limitation, customary indemnification and
contribution obligations, with the managing underwriter of such offering and
take such other actions as are reasonably required in order to expedite or
facilitate the disposition of the Common Shares.
iv NO DISPOSITION OF COMMON SHARES. Buyer agrees
that, upon receipt of any
7
<PAGE> 8
notice from the Seller of the happening of any event of the kind described in
Sections 5.9(a)(vii) or 5.9(a)(viii), Buyer will immediately discontinue
disposition of Common Shares pursuant to the Registration Statement covering the
resale of such Registrable Securities until Buyer's receipt of the copies of the
supplemented or amended prospectus contemplated by Sections 5.9(a)(vii) or
5.9(a)(viii) and, if so directed by the Seller, Buyer shall deliver to the
Seller or destroy (and deliver to the Seller a certificate of destruction) all
copies in Buyer's possession, of the prospectus covering such Common Shares
current at the time of receipt of such notice.
v. METHOD OF UNDERWRITTEN DISTRIBUTION. Buyer may not
participate in any underwritten distribution of the Common Shares unless Buyer
(A) agrees to sell the Common Shares on the basis provided in any underwriting
arrangements in usual and customary form entered into by the Seller, (B)
completes, in a manner reasonably acceptable to the Seller, and executes all
questionnaires, powers of attorney, indemnities, underwriting agreements and
other documents reasonably required under the terms of such underwriting
arrangements, and (C) agrees to pay its pro rata share of all underwriting
discounts and commissions and any expenses in excess of those payable by the
Seller pursuant to Section 5.9(c) below.
(c) EXPENSES OF REGISTRATION. All reasonable expenses, other
than underwriting discounts and commissions, incurred in connection with
registrations, filings or qualifications, relating to one (1) Registration
Statement pursuant to Section 5.9, except that if a portion of Buyer Shares are
not permitted to be included in one (1) Registration Statement by an underwriter
as provided in Section 5.9(a)(i), then relating to the least number of
Registration Statements which will cover the resale of all the Common Shares,
including all registration, listing and qualifications fees, printers and
accounting fees, the fees and disbursements of counsel for the Seller hereof,
shall be borne by the Seller.
(d) INDEMNIFICATION. In the event any Common Shares are
included for resale in a Registration Statement under this Agreement:
8
<PAGE> 9
i. THE SELLER INDEMNIFICATION. To the extent
permitted by law, the Seller will indemnify, hold harmless and defend (A) Buyer
and (B) the directors, officers, partners, members, employees, agents and each
person who controls Buyer within the meaning of Section 15 of the Securities Act
or Section 20 of the Exchange Act, if any, (each, an "Indemnified Person"),
against any joint or several losses, claims, damages, liabilities or expenses
(collectively, together with actions, proceedings or inquiries by any regulatory
or self-regulatory organization, whether commenced or threatened, in respect
thereof, "Claims") to which any of them may become subject insofar as such
Claims arise out of or are based upon: (A) any untrue statement or alleged
untrue statement of a material fact in a Registration Statement or the omission
or alleged omission to state therein a material fact required to be stated or
necessary to make the statements therein not misleading, (B) any untrue
statement or alleged untrue statement of a material fact contained in any
preliminary prospectus if used prior to the effective date of such Registration
Statement, or contained in the final prospectus (as amended or supplemented, if
the Seller files any amendment thereof or supplement thereto with the SEC) or
the omission or alleged omission to state therein any material fact necessary to
make the statements made therein, in light of the circumstances under which the
statements therein were made, not misleading, or (C) any violation or alleged
violation by the Seller of the Securities Act, the Exchange Act, any other
applicable securities law, including, without limitation, any state securities
law, or any rule or regulation thereunder relating to the offer or sale of the
Common Shares (the matters in the foregoing clauses (A) through (C) being,
collectively, "Violations"). Subject to the restrictions set forth in Section
5.9(d)(iii) with respect to the number of legal counsel, the Seller shall
reimburse Buyer and each other Indemnified Person, promptly as such expenses are
incurred and are due and payable, for any reasonable legal fees or other
reasonable expenses incurred by them in connection with investigating or
defending any such Claim. Notwithstanding anything to the contrary contained
herein, the indemnification agreement contained in this Section 5.9(d)(i): (A)
shall not apply to a Claim arising out of or based upon a Violation which occurs
in reliance upon and in conformity with information furnished in writing to the
Seller by such Indemnified Person expressly for use in the Registration
Statement or any such amendment thereof or supplement thereto; (B) shall not
apply to amounts paid in settlement of any Claim if such settlement is effected
without the prior written consent of the Seller; and (C) with respect to any
preliminary prospectus, shall not inure to the benefit of any Indemnified Person
if the untrue statement or omission of material fact contained in the
preliminary prospectus was corrected on a timely basis in the prospectus, as
then amended or supplemented, if such corrected prospectus was timely made
available by the Seller pursuant to Section 5.9(a)(v) hereof, and the
Indemnified Person was promptly advised in writing not to use the incorrect
prospectus prior to the use giving rise to a Violation and such Indemnified
Person, notwithstanding such advice, used it. Such indemnity shall remain in
full force and effect regardless of any investigation made by or on behalf of
the Indemnified Person and shall survive the transfer of the Common Shares by
Buyer. Notwithstanding anything to the contrary contained herein, the
indemnification agreement contained in this Section 5.9(d)(i) with respect to
any preliminary prospectus shall not inure to the benefit of any Indemnified
Party if the untrue statement or omission of material fact contained in the
preliminary prospectus was corrected on a timely basis in the prospectus, as
then amended or supplemented, and the Indemnified Party failed to utilize such
corrected prospectus.
9
<PAGE> 10
ii BUYER INDEMNIFICATION. In connection with any
Registration Statement in which Buyer is participating, Buyer agrees to
indemnify, hold harmless and defend, to the same extent and in the same manner
set forth in Section 5.9(d)(i), the Seller, each of its directors, each of its
officers who signs the Registration Statement, its employees, agents and each
person, if any, who controls the Seller within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act, and any other stockholder
selling securities pursuant to the Registration Statement or any of its
directors or officers or any person who controls such stockholder within the
meaning of the Securities Act or the Exchange Act (collectively and together
with an Indemnified Person, an "Indemnified Party"), against any Claim to which
any of them may become subject, under the Securities Act, the Exchange Act or
otherwise, insofar as such Claim arises out of or is based upon any Violation,
in each case to the extent (and only to the extent) that such Violation occurs
in reliance upon and in conformity with written information furnished to the
Seller by Buyer expressly for use in connection with such Registration
Statement, and subject to Section 5.9(d)(iii), Buyer will reimburse any legal or
other expenses (promptly as such expenses are incurred and are due and payable)
reasonably incurred by them in connection with investigating or defending any
such Claim; PROVIDED, HOWEVER, that the indemnity agreement contained in this
Section 5.9(d)(ii) shall not apply to amounts paid in settlement of any Claim if
such settlement is effected without the prior written consent of Buyer, which
consent shall not be unreasonably withheld. Such indemnity shall remain in full
force and effect regardless of any investigation made by or on behalf of such
Indemnified Party and shall survive the transfer of the Common Shares by Buyer.
iii. Promptly after receipt by an Indemnified Person
or Indemnified Party under this Section 5.9(d) of notice of the commencement of
any action (including any governmental action), such Indemnified Person or
Indemnified Party shall, if a Claim in respect thereof is to made against any
indemnifying party under this Section 5.9(d), deliver to the indemnifying party
a written notice of the commencement thereof, and the indemnifying party shall
have the right to participate in, and, to the extent the indemnifying party so
desires, to assume control of the defense thereof with counsel mutually
satisfactory to the indemnifying party and the Indemnified Person or the
Indemnified Party, as the case may be; PROVIDED, HOWEVER, that such indemnifying
party shall not be entitled to assume such defense and an Indemnified Person or
Indemnified Party shall have the right to retain its own counsel with the
reasonable fees and expenses to be paid by the indemnifying party, if, in the
reasonable opinion of counsel retained by the indemnifying party, the
representation by such counsel of the Indemnified Person or Indemnified Party
and the indemnifying party would be inappropriate due to actual or potential
conflicts of interest between such Indemnified Person or Indemnified Party and
any other party represented by such counsel in such proceeding or the actual or
potential defendants in, or targets of, any such action include both the
Indemnified Person or the Indemnified Party and the indemnifying party and any
such Indemnified Person or Indemnified Party reasonably determines that there
may be legal defenses available to such Indemnified Person or Indemnified Party
which are different from or in addition to those available to such indemnifying
party. The indemnifying party shall pay for only one separate legal counsel for
the Indemnified Persons or the Indemnified Parties, as applicable, and such
legal counsel shall be selected by Buyer, if Buyer or any Indemnified Person is
entitled to indemnification hereunder, or by the Seller, if the Seller or an
Indemnified Party is entitled to indemnification hereunder, as applicable. The
failure to deliver written notice to the indemnifying party within a reasonable
time of the commencement of any such action shall not relieve such indemnifying
party of any liability to the Indemnified Person or Indemnified Party under this
Section 5.9(d), except to the extent that the indemnifying party is actually
prejudiced in its ability to defend such action. The indemnification required by
this Section 5.9(d) shall be made by periodic payments of the amount thereof
during the course of the investigation or defense, as such expense, loss, damage
or liability is incurred and is due and payable.
(e) CONTRIBUTION. To the extent any indemnification by an
indemnifying party is prohibited or limited by law, the indemnifying party
agrees to make the maximum contribution with respect to any amounts for which it
would otherwise be liable under Section 5.9(d) to the fullest extent permitted
by law; PROVIDED, HOWEVER, that no contribution shall be made under
circumstances where the indemnifying party would not have been liable for
indemnification under the fault standards set forth in Section 5.9(d).
(f) EXEMPTION FROM REGISTRATION. The provisions of Section
5.9(a) through (e)
10
<PAGE> 11
notwithstanding, the Seller shall have no obligation to register the resale of
the Common Shares to the extent the Common Shares may be resold without
registration without violating Section 5 of the Securities Act pursuant to Rule
144 promulgated thereunder or any other exemption or exception from registration
under the Securities Act.
PEACHTREE FIBEROPTICS, INC.
By: /s/ Leonard Sokolow
--------------------------------
Leonard J. Sokolow, President
RIVER RAPIDS LTD.
By: /s/
--------------------------------
Authorized Representative
11
<PAGE> 1
Exhibit 10.15
AMENDMENT TO STOCK PURCHASE AGREEMENT
This Amendment to Stock Purchase Agreement is made and entered into on
December 22, 1999 between Peachtree FiberOptics, Inc. d/b/a vFinance.com, a
Delaware corporation (the "Seller"), and River Rapids LTD (the "Buyer").
RECITAL
The Seller desires to amend and the Buyer desires to amend that Stock
Purchase Agreement dated September 27, 1999 by and between the Seller and the
Buyer (the "Stock Purchase Agreement"), upon the terms and subject to the
conditions contained herein.
NOW, THEREFORE, the parties agree as follows:
1. AMENDMENT OF SECTION 1.2. Section 1.2 of the Stock Purchase Agreement shall
be deleted in its entirety and replaced with the following provision:
1.2 THE OPTION. The Buyer has the right to exercise the Option
to purchase all but not less than all of the Option Shares,
commencing on the "Funding", as defined herein below, and
terminating at 5:00 P.M. (Miami, Florida time) on September
27, 2002 (the "Exercise Period"). The exercise price of the
Option is (the "Option Exercise Price") is a follows:
210,000 common shares of Seller at $3.00 per share;
210,000 common shares of Seller at $4.00 per share; and
210,000 common shares of Seller at $5.00 per share
For purposes of this Agreement "Funding" shall be defined as
the date upon which Seller: (i) has sold substantially all its
business or otherwise merged with or been acquired by a third
party; or (ii) has received on a cumulative basis net proceeds
(net of cash commissions) from the sale of its capital stock
(excluding the Shares purchased pursuant to Section 1.1) equal
to or greater than $5,000,000 including any capital
transaction, or series of capital transactions, from any
source whatsoever. For purposes of this Agreement, the merger
of vFinance Holdings, Inc. (vFinance.com) and/or Union
Atlantic LC into Seller shall not be considered a "Funding".
In the event there is no Funding by Seller by April 15, 2000,
the Exercise Period shall terminate immediately and the Option
shall be cancelled and shall deemed null and void and of no
further force and effect. In order to exercise the Option, the
Option Exercise Price must be paid in full by wire transfer of
immediately available funds to a bank designated by the Seller
during the Exercise Period. The Seller hereby represents that
the Option Shares will be free and clear of all pledges,
liens, security interests, encumbrances or other restrictions
arising from the Seller (except restrictions on resale under
state or federal securities laws). Upon exercise of the Option
and payment of the Option Exercise Price, the Seller shall
deliver to the Buyer a certificate representing the Option
Shares. The Option Shares shall be issued in the name of River
Rapids LTD.
2. FULL FORCE AND EFFECT. All other provisions of the Stock Purchase Agreement
shall remain in full force and effect.
IN WITNESS WHEREOF, the parties have executed this Amendment as of the date
first hereinabove written.
PEACHTREE FIBEROPTICS, INC. RIVER RAPIDS LTD.
By: /s/ Leonard Sokolow By: /s/
------------------------------------ ---------------------------
Leonard J. Sokolow, President Authorized Representative
1
<PAGE> 1
EXHIBIT 21
LIST OF SUBSIDIARIES AND PLACE OF ORGANIZATION/INCORPORATION
------------------------------------------------------------
Union Atlantic LC - Florida
vFinance Holdings, Inc. - Florida
<PAGE> 1
Exhibit 23
Consent of Independent Auditors
We consent to the incorporation by reference in the Registration Statement (Form
S-8 No. 33-94354) pertaining to the 1993 Management Agreement between
vFinance.com, Inc. (formerly Peachtree FiberOptics, Inc.) and Leonard J.
Sokolow, the Registration Statement (Form S-8 No. 333-85529), pertaining to the
Consulting and Acquisition Management Agreement with Stephen Krause and Timothy
Mahoney, and the Registration Statement (Form S-8 No. 333-91443) pertaining to
the Consulting Agreement with Stephen Krause, the Agreement with Atlas,
Pearlman, Trop & Borkson, P.A. and the Agreement with Sidney Levine, of our
report dated March 10, 2000, with respect to the consolidated financial
statements of vFinance.com, Inc. included in the Annual Report (Form 10-KSB) for
the year ended December 31,1999.
/s/ Ernst & Young LLP
March 29, 2000
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS FINANCIAL INFORMATION EXTRACTED FROM CONSOLIDATED
FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FORM
10-KSB.
</LEGEND>
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<EXCHANGE-RATE> 1
<CASH> 228,484
<SECURITIES> 0
<RECEIVABLES> 233,306
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 463,940
<PP&E> 110,740
<DEPRECIATION> 89,061
<TOTAL-ASSETS> 520,619
<CURRENT-LIABILITIES> 393,517
<BONDS> 0
0
0
<COMMON> 90,994
<OTHER-SE> 36,108
<TOTAL-LIABILITY-AND-EQUITY> 520,619
<SALES> 1,502,427
<TOTAL-REVENUES> 1,502,427
<CGS> 187,540
<TOTAL-COSTS> 187,540
<OTHER-EXPENSES> 666,003
<LOSS-PROVISION> 283,110
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 648,884
<INCOME-TAX> 0
<INCOME-CONTINUING> 650,042
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 650,042
<EPS-BASIC> .05
<EPS-DILUTED> .05
</TABLE>
